(Warning: Typos Intact, Not Legal Advice)

What debts can my father pay before applying for Medicaid to go into nursing home?

My father co-signed for my mortgage back in 2015. He is not on the deed, only the loan . His health is failing and now needs long term care. Would paying off this mortgage qualify as a debt he could pay off without triggering a penalty from Medicaid ?

Answer: The issue here, of course, is that by paying your debts, your father could potentially be divesting assets, which could subject him to a penalty period for Medicaid. The key question is whether he has a legal obligation to pay this debt. According to your email, he does. If the debt arose outside of the penalty period, then the question becomes whether paying off the debt constitutes a transfer of resources for fair market value.

While there are arguments on both sides, I would argue that there is no divestment because the legal obligation to pay the debt does exist. Your father is using his assets to satisfy a legal obligation, which is not a transfer for less than fair market value. The original obligation occurred more than seven years ago, and what’s happening now is simply the fulfillment of that obligation. Given this, I believe your father should be fine in this situation.