Question:
My mother, who is 93, is in long term dementia care. She has a reverse mortgage, but due to her never receiving monthly payments, she qualified for Medicaid. It is now time to sell the house and pay the reverse mortgage. The house was appraised at $340,000 in 2016 but would probably sell for no more than $270,000 now. She owes approximately $140,000. We realize Medicaid would get the remainder and that’s fine. The reverse mortgage company has given us two options, sell the house using a realtor or surrender the house to them. If we did surrender it, it is my understanding that they would get it all and we don’t have to deal with repairs, realtor, etc. However, would there be a problem for us with Medicaid? I’m concerned with any repairs that may have to be made to sell with realtor which I cannot afford.
Response:
The issue is whether Medicaid would deem the surrender of the property to the reverse mortgage company to be a transfer of the remaining equity of approximately $130,000, causing your mother to be ineligible for benefits for a period of time as a result. It’s possible that the property would receive less without your making the repairs suggested by the realtor, making the differential less. It’s hard to predict whether it’s enough less so that Medicaid would not see turning over the house to be a transfer of assets. I would suggest approaching the Medicaid agency with the information about the mortgage, the fair market value of the house, and the cost of necessary repairs for its sale and seek its advance approval of surrendering the house to the mortgage company.
