Q: My dad currently lives in an adult family home. We spent down his retirement and savings to pay for the facility, and then he applied for Medicaid. The State of Pennsylvania denied him Medicaid benefits for being over the asset limit because he owns an old motorhome. The state is valuing the motorhome well over what it could possibly be sold for. He still has his own home, which will be placed on the market to sell later this month. He is now unable to pay for the care at the facility. Can I loan my dad the money to pay for his care and have him reimburse me when his house sells? Would paying me back be considered “a gift?” I would have to use my emergency credit card (which currently has a zero balance) to make the payment for his care.
A: Yes, you can advance the funds and be reimbursed — as long as you provide proof to the state that this is a loan. Your father needs to sign a promissory note, promising to repay you just like if he were borrowing the money from the bank. But if the home that is going to be sold is the motorhome, check with the Pennsylvania State Medicaid agency before loaning him the money. The agency may be willing to not count the asset while it is on the market.
Stanley Vasiliadis adds, “An interesting variation on the use of loans to pay for a parent’s nursing home care is a Medicaid asset protection strategy referred to as “Gift & Loan.” A nursing home resident gifts a substantial amount of assets to desired beneficiaries. The remaining amount of excess resources are loaned to the beneficiaries under terms that meet Medicaid requirements. Loan payments cover the cost of care during the penalty period caused by the gift.”
Contact Vasiliadis Pappas Associates to learn more about this and other measures to protect assets and qualify for Medicaid.