Oftentimes, a Medicaid recipient who otherwise has achieved Medicaid eligibility may receive assets that can affect their ability to receive Medicaid benefits.
If the Medicaid recipient (or a Medicaid applicant) is in a nursing home and has property which was willed to him or to his spouse by a family member, loved one or other person, this increase in assets can affect Medicaid eligibility. But there is not much to worry about when it comes to a potential ineligibility from the Medicaid program. The length of any disqualification from Medicaid benefits will be no longer than amount of time it will take to exhaust the inheritance money paying for care.
To determine the exact effect that a prospective inheritance will have on Medicaid eligibility, the exact terms of inheritance must be secured from the will. The Medicaid applicant or his spouse may share the inheritance with other persons and hence own only a proportionate share of its net real value, or may have only a life interest in it. If there was no will, it is necessary to ascertain the interest a surviving spouse of the deceased person has in the estate and whether there are surviving children of other heirs.
It is also important to remember that an “inheritance” may not simply be the naming of the Medicaid applicant in a will. For example, the same rules apply here if the Medicaid applicant is named as the beneficiary or a Transfer on Death on a deceased person’s bank account or investment account. Or receiving a lump sum payment from a life insurance policy.
Next, it is necessary to determine whether the inheritance money will place the Medicaid applicant above the applicable asset limits for Medicaid coverage. Or is the bequest actually an exempt asset for the Medicaid recipient. If so, no disqualification from Medicaid coverage will occur.
Once the value of interest assignable to the Medicaid applicant has been determined, it is next step is to determine when the inheritance will be considered to be the property of the Medicaid applicant.
In determining eligibility for assistance on the basis of ownership of property, the interest of an applicant or recipient in property of any kind acquired by inheritance will be considered at the time the Medicaid recipient actually has accessibility to the asset. Any affect on eligibility would take place beginning the following month.
The general principle to be followed in inheritance of real property is that ownership begins with the date of the testator’s death. While accessibility is the rule for any affect on Medicaid benefits, it is best to contact the state Medicaid agency as soon as the existence of the inheritance is made known the family.
Title to personal property vests in the personal representative of the heirs (administrator or executor) until administration is completed and the estate is fully settled or distributed. Therefore, in determining eligibility with respect to ownership of cash or negotiable securities, determine from the records of the Probate Court and from the administrator of the estate the date on which such property will actually be available to the applicant or recipient.
As an aside, it is important to note that eliminating the problem by immediately gifting the assets to other family members is not an available strategy. As with long held assets, any gifts of the inheritance will violate the Medicaid lookback period and will result in a penalty periods. Even a properly filed and executed Disclaimer will not avoid the application of a penalty period.
It is important to point out that, with pre-planning techniques, any affect on Medicaid eligibility can be completely eliminated. The loved that has left the applicant the funds could have adjusted their estate planning to leave their assets to the loved one receiving nursing home care in an asset protection trust or in a special needs trust. Either of these techniques would allow the long-term care recipient to benefit from the bequest without affecting his or her Medicaid eligibility. Proper Medicaid planning, careful planning and legal advice from a qualified estate planning attorney or elder law attorney can be money well spent. Money can be saved, and peace of mind can be created.
Contact QMC to learn more about how to structure inheritance bequests to avoid Medicaid ineligibility.