Florida Medicaid ESS Manual Section: 1840.0109.04. Please note, even if the inheritance is spent in its entirety in the month in which it was received, Medicaid should still be notified of the inheritance and how it was spent. However, it is possible to implement it if a Medicaid recipient still has enough funds to pay for care during the Medicaid ineligibility period. Therefore, if at all possible, the inheritance should be “spent down” to the asset limit in the month in which it is received in order to avoid the possibility of being Medicaid ineligible the following month. On the other hand, if you inherit money and do not report it, you will be required to pay Medicaid back for the services and benefits that were provided during any period of ineligibility. Medicaid allows a spouse of a nursing home resident who's still living in the community to keep up to $109,560 in countable assets as of 2011. Now its time to consider other ways to convert assets into non-countable resources.
Examples of these are: a vehicle of any value, homestead (up to $585,000 as of 2019), and income-producing property among others. An inheritance can be in the name of either spouse as long as the total countable assets stay under $109,560. If you're under age 65, you may be able to purchase an individual policy; even if you have significant health issues, many states have health insurance specifically for high-risk applicants.
At some point, buying more âstuffâ wont make sense or will just be wasteful. This means that they cannot be counted against a Medicaid recipient (or applicant) when determining eligibility. Within 10 days of receiving an inheritance, each Medicaid recipient is obligated to report the change in circumstance to the Social Security Administration and Department of Children and Families along with an explanation of what happened to the inherited funds or assets. Do you have to pay back Medicaid if you inherit money? Not only must a Medicaid applicant meet this asset limit in order to qualify for benefits, he / she must maintain his / her assets at, or below, this level. There are also much more complicated planning techniques, such as the Modern Half a Loaf Strategy, which can protect some of the inheritance for other relatives.
If you're on Medicaid because you've qualified for Supplemental Security Income, for example, your income must be less than $674 for an individual and $1,011 for a couple. When a Medicaid recipient receives an inheritance, it is counted as income in the month that it is received. Inheriting a sum of money may affect your eligibility, depending on how much you inherited and what you do with the investment. If this happens, then benefits will be maintained for the following calendar month. If you are inheriting a significant sum of money, property or a business, you should consider consulting an attorney for help navigating your state's specific Medicaid guidelines.
If you're a senior or disabled, you may qualify for Medicare. If over the age of 65, the Medicaid recipient will only have access to a pooled special needs trust (also referred to as a âd4C special needs trustâ). What “careful” means, though, can be misunderstood without the necessary expertise. For larger inheritances, spending all of it on âstuffâ would likely be too wasteful. The two most commonly used techniques used by elder law attorneys are: The personal services contract (also called a family caregiver agreement) is explained in more detail (click the link to read a more in-depth article explaining: what is a personal service contract?). This article will explain what happens when a Medicaid recipient receives an inheritance and what the person about to receive an inheritance can do to preserve their Medicaid benefits.
Even if you are comfortable giving up Medicaid, you still want to inform them of the change in circumstances because Medicaid will ask you to payback the amount of money Medicaid laid out while you were no longer eligible. The following month, any remaining inheritance is counted as an asset. The inheritance must be handled carefully to minimize expensive penalties.
Medicaid recipients must constantly maintain assets below $2,000.00. YouÂ would avoid this by reporting the influx of assets in Medicaid and that you no longer wish to receive Medicaid benefits in the same month in which the new assets were received. Receiving an inheritance can be an enormous gift, but the way in which you manage those funds can have a significant impact on your financial interests and security. ALL RIGHTS RESERVED. If done properly, Medicaid will not deem the asset a gift, but rather a payment for the fair market value of services to be received.
This is often some of the same items described in the spend down section above, such as entertainment, travel, home improvements, paying off debt, and other approved expenses. If your inheritance puts you over these limits, it may disqualify you from Medicaid. Â Another article I have written describes what a special needs trust can pay for.
No reader of this post should act, or refrain from acting, on the basis of any information included in, or accessible through, this website without first hiring a lawyer licensed in your state to discuss the particular facts and circumstances at issue.
We donât give tax advice, so this is an issue that you will need to discuss with your accountant or tax adviser, however the income tax burden to the caregiver can, if needed, be deferred using an annuity. The Medicaid recipient must still report the change in circumstances, but will simply explain how the money was spent to bring their total assets below $2,000.00. This allows your medicaid-planning lawyer to provide you a well thought out plan that can be put in place before the inheritance is received to ensure that all players understand what they need to do and provide for a smooth transition and no loss of benefits. the large inheritance), Medicaid benefits will cease and the former Medicaid recipient will private pay for their care. To see state specific asset limits, click here).
Essentially, the government allows the use of special needs trusts to preserve Medicaid benefits.
When a person is drawing Medicaid benefits and inherits money or property, that inheritance jeopardizes the benefits. Inheritance does affect Medicaid eligibility and the results can be even more dramatic if she is covered by Medicare because of her disability. If one is considering this planning technique, it is highly advised one seek the assistance of a professional Medicaid planner. If the Medicaid beneficiary is receiving a small inheritance, then the beneficiary free to spend down his/her inheritance, in the same calendar month in which they inherit excess resources, and inform Medicaid how the money was spent. If you inherit an annuity and it pays out a monthly benefit, if it puts you over the SSI monthly limit, you will no longer qualify for SSI or for Medicaid.
For small inheritances, that might be easy to do. Use of this content by websites or commercial organizations without written permission is prohibited. Medicaid coverage will then end until she has again spent down her money to the countable asset limit, $2,000 in many states. If under the age of 65, the Medicaid beneficiary can utilize a self-settled special needs trust (also referred to as a âd4A special needs trustâ). Your elder law attorney will have other creative ways of taking an inheritance and maintaining Medicaid eligibility, but this provides some basic information of what you should be thinking about to preserve Medicaid benefits after an inheritance. So, for example, if a Medicaid beneficiary inherits $5,000.00, think of how they may want to spend that money in the same calendar month in which it is received. Because the timing of when you are entitled to the inheritance will dictate how much pressure you will be under to remain in Medicaid compliance. Those who need long-term facility care but no longer have the means to pay for care, may also qualify for Medicaid.
A Medicaid beneficiary must retain $2,000.00 or less by the end of any calendar month. Copyright © 2020 All rights reserved.
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