Monday, August 02, 2010

How does my rental real estate affect Medicaid

Recently, we had a client who has always managed rental real estate, and used the rent to supplement social security.  Unfortunately, his wife has recently had a major stroke, and will likely require nursing home care for the rest of her lifetime, and they were concerned about the costs and interested in finding out more about Medicaid.  For the last 30 years, they have basically invested all of the funds they could save into purchasing rental properties, and now have 10 units that are managed by the husband.

He was concerned that he would be forced to sell most, if not all of his properties (which remember provide him the bulk of his monthly income) before his wife could qualify for Medicaid benefits.   This is a very tricky question, and unfortunately, the answer is not 100% clear.  

Federal law would exempt any business producing property, which would normally include rental real estate.  However, Missouri has long taken the position that rental real estate can never be business producing property.   So, when federal law says 1 thing, and the state policy says another- who wins?

Unfortunately, at the initial level, the answer is fairly certain that State will count the equity in the properties in the same manner that they would count cash in the checking account.  This would meant that all but $109,560 of the equity must be spent prior to qualifying for Medicaid benefits, which will require the sale of all but 1 of the properties, and the loss of approximately 75% of the family income on a monthly basis.

This is one of those situations, however, that shows how having a skilled elder law attorney, is really required to navigate through the maze of public benefits, including Medicaid.   The Medicaid rules are clear that federal law should trump the state law, and these assets should not be countable.   Most people, and a lot of attorneys, will just give up and say this is what the state law says, so they are stuck.   Our firm does not believe in allowing the state to "do what it pleases."    We believe that by appealling and fighting to make the State follow federal law, we will be able to secure a victory for our client, and for seniors all over Missouri.