How to Keep Medicaid After Personal Injury Settlement or Inheritance
Medicaid recipients must constantly maintain assets below $2,000.00. If their assets ever exceed $2,000 at the end of any calendar month, they will no longer be Medicaid-eligible. Those on medicaid may not be sure of what to do when receiving an inheritance from a recently-deceased family member or from a personal injury settlement. This article will explain what happens when a Medicaid recipient receives an inheritance or personal injury settlement and what the person about to receive an inheritance can do to preserve their Medicaid benefits.
Some action must be taken in the same calendar month funds are available to a Medicaid beneficiary. The timing of this is very important (which is why it makes sense for you to talk to a Medicaid-planning lawyer ASAP, and not just when you receive a large check!
The biggest mistake a medicaid recipient can make after receiving personal injury proceeds, or an inheritance, is giving any portion of it away (usually they want to give the money to a family member or friend). Gifts result in Medicaid ineligibility penalty periods.
I should emphasize here, often Medicaid recipients think that because the IRS allows gifts of up to $14,000 (as of 2017) that giving an amount less than what the IRS allows will allow them to retain their Medicaid. It will not. This line of thinking often gets those who want Medicaid in trouble. Medicaid gifting rules have nothing to do with IRS gifting rules.