CMP Financial Planning

Purchasing a Home For Your Family Member with Special Needs


 

As their child with a disability reaches adulthood, families give increased thought to their child’s housing needs.   Many families want to promote the maximum independence of their child while others are concerned for their loved one’s living arrangements after their own death.  In either case, home ownership can be a great way to provide the most suitable living environment for their family member with a disability.  This article addresses public assistance eligibility issues and the pros and cons of home ownership.

Eligibility Considerations

As they would with asset, families will want to carefully consider how a home purchase will affect the person’s eligibility for Medicaid and Supplemental Security Income (SSI). Additionally, families will want to plan for what will happen to the home after the individual’s death.  Below are different ownership scenarios and how they might impact eligibility for Medicaid and SSI might be impacted, assuming the person with a disability is 18 year of age or older.

Ownership by Individual with Disability:  If the home is titled in the individual’s name, Medicaid and SSI are not impacted; however upon the individual’s death, Medicaid may put a lien on the home to collect for any Medicaid long term care services rendered. Resources used to pay for home maintenance costs, property taxes, insurance etc. will affect SSI benefit up to 1/3 of the SSI maximum benefit.

Ownership by Parent or Sibling of Individual:  If the home is owned by other family members, Medicaid generally will not be impacted. SSI benefits will be reduced to the extent that food and shelter are provided to the individual for free.  The home, however, would be subject to the debts of the other family member.

Ownership by 1st party Special Needs Trust (SNT):  Medicaid eligibility is not impacted; however, Medicaid will require the SNT to reimburse the program for services provided upon the death of the individual.  SNT expenditures for housing will affect the SSI benefit up to 1/3 of the SSI maximum benefit.

Ownership by 3rd party SNT:   Eligibility discussion is same as 1st party SNT except that upon the death of the individual home ownership is retained by the trust.

The sale of a home can affect eligibility if the home is owned by the individual or a first party SNT.

Costs & Benefits of Home Ownership

Beyond eligibility issues, the economics and resources required to own and maintain a home need to be carefully weighed.   Even if the home can be purchased outright from the individual’s or family assets,  the costs of maintaining  the home, installing home modifications, paying for utilities, taxes and insurance, etc.,  all need to be factored in to determine if a home purchase makes sense compared to renting.    In addition, the time required to support the person with a disability in maintaining the home needs to be considered.

On the positive side, a home purchase or gift can provide the individual with a disability a sense of pride and responsibility that comes through ownership. Home ownership can provide flexibility about to where one lives and more options when it comes to deciding with whom to live or not to live.  Many families have a strong desire for their loved one to remain in the family home after the death of the parents: home ownership enables the person with disabilities to do that.

Once the decision to purchase a new home or keep the family home has been made, it may be beneficial to work with the county board in terms of finding suitable roommates.  If the individual is on a Medicaid waiver, any home modifications that need to occur might be paid for by the waiver. If the family does not care about the ownership of the home after the person with a disability passes away and want to avoid having to maintain the home, they may want to try to sell or give the home to a housing cooperative that works in conjunction with the county board of developmental disabilities.

Home ownership for anybody is a complex decision. That decision is even more complicated when taking into account the unique needs of the person with a disability and public assistance benefits that may be impacted.  Consulting a special needs estate attorney and financial planner before making such a decision will help families craft a solution that best serves the housing needs and overall interests of their loved one.

By Barry Jamieson

References

  1. Special Needs Alliance, The Voice Newsletter, May 2011 Vol. 5, Issue 9. “Buying a House for a Special Needs Beneficiary: Proceed with Care!”
  2. www.caring.com October 31, 2016“Does Owning a House Affect Medicaid and SSI Disability?
  3. https://blog.thearc.org. Tripp, Amy, May 24, 2017 “Owning a Home with a Special Needs Trust.”