From 24/7 Wall St. · Gerelyn Terzo · · 1m 20s
Her Son's Free Rent Triggers Medicaid Gift Penalty
A mother's four-year rent-free housing for her son may count as a $72,000 Medicaid gift.
In brief
A mother's four-year rent-free housing for her son may count as a $72,000 Medicaid gift. A mother's son living rent-free in her house for four years after losing his job could be seen as a $72,000 gift to Medicaid, delaying nursing home coverage. Originally reported by 24/7 Wall St..
Mother hands son keys to rental house
A widowed mother gives her son keys to her rental house after he loses his job, telling him to forget rent.
Son stays four years rent-free
The son lives in the house for four years without paying $1,500 monthly rent.
Unpaid rent totals $72,000
Over four years, the mother never collected $72,000 in rent that she could have paid.
Medicaid may count unpaid rent as gift
Her state may treat the unpaid rent as a $72,000 gift that delays nursing home coverage.
Medicaid looks at asset transfers
Medicaid checks for assets given away through transfers below fair market value.
State rules vary on rent treatment
Some states count below-market rent as uncompensated value while others apply different rules.
Rental house may count as asset
The house itself could be counted as an asset if it doesn't produce income.
Documentation helps avoid penalties
A written lease, repair receipts, and fair market comparisons can strengthen the family's case.
The big picture
A mother's son living rent-free in her house for four years after losing his job could be seen as a $72,000 gift to Medicaid, delaying nursing home coverage.
