Raleigh Estate Planning and Corporate Law Attorneys

Approved for Medicaid: What if Your Loved One Receives an Inheritance?

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inheritance medicaid

One of the most dreaded possibilities following Medicaid approval is a change in the Medicaid recipient’s situation, and one of the most common changes is the receipt of funds from the estate of a deceased family member.

In a previous post, we discussed the need for any at-home spouse to update their estate plan to ensure that any assets passing to a spouse in care are done so in a manner that will not jeopardize the ongoing Medicaid approval of the in-care spouse.  However, even if the at-home spouse takes care of things, there are always situations that can arise.  One of the more common ones involves the in-care spouse receiving an inheritance from a parent or child.

If an inheritance is received, the first thing to do is contact your Elder Law attorney if you worked with one.  If you didn’t there are some important things to remember:

  • You have thirty days in which to report the receipt of assets to the Department of Social Services where Medicaid was applied for. If you fail to report within thirty days, you may be responsible for reimbursing the State for funds expended on behalf of the Medicaid recipient while they were ineligible.
  • If the amount is small and can be spent on the needs of the Medicaid recipient, be sure to complete the spending prior to the last day of the month in which the inheritance is received.
  • If the amount is large, you still may be able to spend it down before the last day of the month. Consider prepaying for the individual’s funeral in full or paying off any outstanding obligations.
  • If there is an at-home spouse, consult with your Elder Law attorney about transferring the inheritance to the at-home spouse.
  • Do not give the money away to others – it will cause a period of ineligibility.
  • Do not sign a renunciation of your interest in the inheritance (or on behalf of the individual) – a renunciation is considered exercise of control over the asset which Medicaid views as a gift.

If, at the end of the month, the individual still has more than $2,000.00, they will need to pay privately for their care until they are back below $2,000.00.  Again, an Elder Law attorney will be able to guide you through this process in a manner that is beneficial for the Medicaid recipient and, if possible, for his at-home spouse, but do not wait – take affirmative steps to address the situation.