How to Keep Medicaid After Receiving an 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. So, when someone receives a lump sum inheritance from a recently-deceased family member, there may be work to do.
What Happens When a Medicaid Recipient Receives an Inheritance?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.
If the inheritance is large and Medicaid is no longer needed
If the inheritance is rather large, and the Medicaid recipient will be comfortable without Medicaid assistance, then the process ends here. After you inform Medicaid of the change in circumstances (i.e. the large inheritance), Medicaid benefits will cease and the former Medicaid recipient will private pay for their care. If the Medicaid recipient is receiving a large inheritance, there is nothing wrong with removing oneself from the Medicaid program.
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. For example, if you receive an inheritance in January but don't inform Medicaid and they continue to pay benefits for January, February, and March, when they eventually realize that you are no longer eligible, you could receive an unwelcome bill for the value of the Medicaid benefits they paid for those months.
If inheritance is small and you still want Medicaid
If the Medicaid beneficiary is receiving a small inheritance, then the beneficiary free to spenddown his/her inheritance, in the same calendar month in which they inherit excess resources, and inform Medicaid how the money was spent.
As long as the inheritance was spent on items and services for the benefit of the Medicaid recipient only, and not given away, Medicaid will be preserved. 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. Examples include using inherited money to: pay off credit card debt, pre-pay for funeral expenses, purchase a new big-screen television, fixing a car, buy new clothes, going out to a nice dinner, travel expenses, etc...
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.
Its important to note that you cannot simply disclaim or refuse your inheritance. If you have access to assets, Medicaid wants you to use it for your care before they spend a dime. By declining an inheritance, to Medicaid, is tantamount to giving assets away (which subjects the Medicaid beneficiary to a disqualification penalty period). So its important to meet with a local Florida Elder Law attorney to discuss what to do with the sudden influx of assets from an inheritance to maintain Medicaid eligibility.
To Preserve Medicaid Benefits After Receiving an Inheritance - Speak to an Elder Law AttorneyA Medicaid beneficiary must retain $2,000.00 or less by the end of any calendar month. If this happens, then benefits will be maintained for the following calendar month. I want to emphasize how important the calendar month is. 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. For example, if an inheritance of $100,000.00 is received on January 1st, the Medicaid recipient has the rest of January to either spend the money or engage an Elder law attorney to protect the inheritance and maintain Medicaid benefits. If, on the other hand, the Medicaid beneficiary is entitled to their inheritance on January 28th, now they only have a few days (January 28, 29, 30 and 31) to get back into compliance. If the Medicaid beneficiary retains more than $2,000 in total assets as of February 1 (in this example), they will lose Medicaid.
As explained above, a Medicaid recipient need only spend down their recent inheritance in order to re-qualify for Medicaid. For small inheritances, that might be easy to do. For larger inheritances, spending all of it on "stuff" would likely be too wasteful. Luckily, we have some Medicaid planning techniques available: typically involving special needs trusts, personal services contracts, purchasing exempt assets, or a combination of Medicaid planning techniques.
You should meet with a local elder law attorney to discuss what Medicaid preservation strategies are best for your unique situation and goals.