There is great freedom in grabbing your keys, jumping into your car, and driving wherever you want to go. Nobody wants to think of a day when we might lose that freedom. But as we age, a time can come to give up those precious keys and rely on others to drive us where we want or need to go.
When that last car (or really any car) is sold, there might be a future need to rely on government benefits such as Medicaid, to pay for in-home assisted living or nursing home care. It is important to handle this transaction in a specific way.
For someone that might need Medicaid benefits within five years of selling a vehicle, the lack of sale documentation and a sale for less than fair market value can cause snags in the application process. The following steps should be taken to ensure the vehicle sale will not interfere with eligibility for Medicaid.
- Do not sell the vehicle for less than fair market value. Michigan Medicaid policy refers to Kelley Blue Book and NADA as sources to find the wholesale (trade-in) value. A divestment penalty could be assessed if the vehicle were transferred for less than the lowest trade-in value. It is great to keep this record for a future Medicaid application.
- Get a Bill of Sale. A Bill of Sale stating the vehicle is sold “as-is” is always wise. For Medicaid purposes, this document should include the date of sale; the vehicle year, make, and model; the names of the buyer and seller; the price; and the signatures of both parties. It also does not hurt to make a copy of the title for record-keeping purposes.
- Deposit the money into the vehicle owner’s account. Whether cash or check is received for the sale, always deposit the funds in the owner’s account. I would recommend making a copy of the check and keeping the bank statement showing the deposit with the value statement, copy of the title, and Bill of Sale.
Disclosing the sale of vehicles within five years of applying for Medicaid benefits is just one small detail of many in a successful application process. Please contact us to find out more when helping an elderly loved one in this stage of life. When government benefits are needed for in-home, assisted living, and nursing home care – it is critical to have done things correctly in the five years leading up to the application.
