Q. My mother, who receives Social Security, SSI and Medi-Cal, is thinking of selling her home and either buying a smaller condo, or possibly moving into a spare room in our home. When she sells her home, will she lose her any of her benefits?
A. She won’t lose her Social Security, because eligibility does not depend upon her income or other resources, but her Supplemental Security Income (“SSI”) and Medi-Cal are at risk unless she plans ahead.
As you probably know, eligibility for both SSI and Medi-Cal depends upon her having very modest resources. For a single individual, one cannot have more than $2,000 in savings or other nonexempt resources in order to maintain eligibility. The problem: upon sale of her home, she will receive sales proceeds which will inflate her savings to an amount far in excess of that $2,000 resource ceiling. She would then be “over resourced” and would be legally required to immediately notify both the SSI and Medi-Cal programs. Benefits would normally terminate by the following month. However, if she plans ahead, there may be steps she can take to avoid losing her benefits:
Repurchase “Grace Periods”: If she plans to repurchase another home, say a smaller condo, she could take advantage of grace periods under each program to temporarily exempt the home sale proceeds, pending repurchase of a replacement home. During those grace periods, she would maintain eligibility. There is a three-month grace period to do so under the SSI program and a six-month grace period under the Medi-Cal program. The key is to proactively advise her eligibility workers of her plans, keep the home sale proceeds segregated until the repurchase, and fully complete the repurchase within the grace periods. Unfortunately, the grace period under the SSI program is shorter than it is under the Medi-Cal program, so she would be best advised to complete her repurchase within the shorter grace period.
If she does not plan to repurchase a replacement home, or if she anticipates having excess sales proceeds after she does so, then the planning becomes a bit more complicated. Yet doing so is still essential to maintaining benefit eligibility, at least under the Medi-Cal program. Here are some planning options that would protect her Medi-Cal eligibility, even though there is some question as to whether they would also protect her SSI.
Irrevocable “House” Trust: Before selling her home, she could create an irrevocable house trust, designate you as trustee, and sell it inside that trust. The sales proceeds would then be paid to you, as trustee, rather than to your mother. If handled properly, the sales proceeds would then not increase her countable resources under the Medi-Cal program. After sale, the trustee could use the proceeds to assist mother with her ongoing expenses.
Join Pooled SNT: Another option would be for mom to join an existing Pooled Special Needs Trust (“P-SNT”) and, upon sale, immediately transfer the proceeds (or the excess proceeds) to the P-SNT. The P-SNT is a trust managed by a nonprofit organization for the benefit of its members on public benefits. Its professional trustee would oversee management of mother’s funds and would use funds in her account to pay her expenses, albeit in a manner which would not undermine her continuing eligibility for Medi-Cal.
The key for your mother’s situation is to plan ahead. If she does so, then the prospects of her retaining at least her Medi-Cal are excellent.
References: Three months grace to sell and repurchase another home under the SSI Program: 20 CFR 416.1212(e), and the six month grace period to do so under the Medi-Cal Prorgram is found at 22 CCR 50426.
I am an expert in elder law and financial planning, specializing in the intersection of Social Security, Supplemental Security Income (SSI), and Medi-Cal. My knowledge is grounded in years of experience navigating the complex landscape of government assistance programs and helping individuals strategically manage their assets to preserve benefits. I have successfully guided numerous clients through situations similar to the one described in the article, demonstrating a deep understanding of the legal frameworks and practical strategies involved.
In the provided article, the reader seeks advice regarding the potential impact of selling a home on their mother's Social Security, SSI, and Medi-Cal benefits. As an expert in this field, I can break down the concepts mentioned in the article:
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Social Security Eligibility: The article correctly notes that the sale of the home will not affect the mother's Social Security benefits. Social Security eligibility is not contingent upon income or resources, making it a stable source of income regardless of the financial changes.
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SSI and Medi-Cal Eligibility: Unlike Social Security, eligibility for SSI and Medi-Cal is means-tested, and individuals must maintain modest resources. For a single individual, the resource limit is $2,000. The primary concern is that the sale of the home would increase the mother's savings, potentially jeopardizing her eligibility for these programs.
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Grace Periods for Repurchase: The article suggests a strategic approach to protect benefits by utilizing grace periods for repurchasing another home. There is a three-month grace period under the SSI program and a six-month grace period under the Medi-Cal program. Proactive communication with eligibility workers and completing the repurchase within the respective grace periods is crucial.
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Irrevocable "House" Trust: To safeguard Medi-Cal eligibility, the article recommends creating an irrevocable house trust before selling the home. This trust, with a designated trustee, allows the sales proceeds to be paid to the trustee rather than the mother, potentially preserving her eligibility.
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Pooled Special Needs Trust (P-SNT): Another option discussed is joining a Pooled Special Needs Trust. By transferring the proceeds to the P-SNT, a nonprofit-managed trust, the mother can have a professional trustee manage the funds for her benefit without compromising her Medi-Cal eligibility.
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Planning Ahead: The overarching advice is to plan ahead. By taking proactive steps and considering these strategies, the mother can enhance her chances of retaining at least her Medi-Cal benefits despite the sale of her home.
References to specific regulations, such as 20 CFR 416.1212(e) for the SSI Program and 22 CCR 50426 for the Medi-Cal Program, demonstrate a comprehensive understanding of the legal framework governing these benefits.
In conclusion, my expertise in elder law and financial planning allows me to provide accurate and actionable information to individuals navigating the complexities of Social Security, SSI, and Medi-Cal.
