Under the Medicaid law, there are certain rules allowing a person to retain or redirect certain assets and still maintain Medicaid eligibility. You are well advised to consult with an experienced elder law attorney in your state to find out all your options.
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In general, a recipient of Medical Assistance long-term care benfits has an ongoing duty to report changes to the state Medicaid agency. In Pennsylvania the sale of the real property would need to be promptly disclosed to the Department of Public Welfare's County Assistance Office. In some states you may have the obligation to notify the agency that a given property has been listed for sale. (Hopefully the receipt of the inheritance was already promptly reported. If not then you'll want to be careful about using the sale proceeds to pay-off debt because overpayments of benefits could have occurred during the time when the asset had not been disclosed.) The sale proceeds will likely temporarily place the Medicaid recipient over her resource limit until the excess resources (sale proceeds) can be spent-down. The prompt spend-down of the sale proceeds (excess resources) on her own debts should not give rise to a period of ineligibility for benefits. Be aware that the Medicaid caseworker is likely to scrutinize the debts and want to be assured that the debts are in fact hers, and legitimate. The way to help make sure the sale and pay-off of the debt will not give rise to an improper discontinuance of benefits is to communicate with the ongoing caseworker and let that person know she plans to sell the real estate and pay-off her debt. Request that the caseworker hold-off on discontinuing benefits and promising to send in written verification of the spend-down, i.e., copies of the bills, checks paying the bills, and bank statement or print-out from the bank verifying the payments. By having this advance conversation with the caseworker you are more likely to avoid the discontinuance of benefits and avoid the need to re-apply for benefits. As mentioned in the first answer, you absolutely should have experienced legal counsel providing help during the spend-down. With monthly nursing home expenses being what they are, a mistake here can be quite costly. Hope this helps!
Yes, if done EXACTLY right. South Dakota has a very strict Medicaid program. In general, a recipient or applicant can use exempted property to pay bills of the applicant or recipient. However, some states have strict limitations on what they will consider to be legitimate debt. In addition to the foregoing, there is the issue of timing and application. Will Medicaid require this woman to lose benefits for one month or not? Obviously there is a lot riding on doing this EXACTLY right. You do need to consult with a competent experienced elder law attorney. If the attorney is a Certified Elder Law Attorney you have an assurance s/he knows what Medicaid in your state.
For more information about Michigan Medicaid see my website www.JimSchuster.com