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Lucy, Esq.
Lucy, Esq., Attorney
Category: Legal
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Experience:  Lawyer
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We live in Pennsylvania. My wifes parents are going to retire

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We live in Pennsylvania. My wife's parents are going to retire and move near us. There only asset is their home. If they move in with us can they give us the money from the sale to put on an addition? If they end up in a nursing home can the state come after the money that was put in the addition?

My name is XXXXX XXXXX I'd be happy to answer your questions today.

There is a five-year look back period for purposes of Medicaid benefits. What that means is that, if a person seeks benefits, Medicaid will look at all assets transferred during the past five years to determine the person's eligibility. If a person gave away an asset during that time, they're essentially treated as if they still had it. What that means is that Medicaid will look at the value of the home, and the average cost of nursing home care in your state, then deny coverage for a number of months based on the result.

For example, assume that the house is worth $50,000. If they sell the house and give you the $50,000, and average nursing care in your area is $5,000, Medicaid can decline to pay for the care for 10 months. This time is known as the penalty period.

There are some exemptions that can protect the house itself while they are living in it. But if the house is sold, the money the get from the sale wouldn't be protected.

If you have any questions or concerns about what I've written, please reply so that I may address them. It's important to me that you are 100% satisfied with the service I provide. Otherwise, please rate my service positively so that I get credit for answering your question. Thank you.
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Customer: replied 4 years ago.

Thank you for your quick reply. What about if they annually gifted an amount of money to us from the sale of their home? Would that be protected against the Medicaid penalty period?

No. Any assets transferred for less than fair market value within the past five years is not protected. If you had equity in your home, you could sell it to them. Or if they bought a home near you that they were living in together, it would be protected while one of them is still living in it, unless there was significant equity in it.

They may want to sit down with a local elder law attorney who can review their entire financial profile and make some suggestions for ways to protect their assets.
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