My Mom recieved $3,000 plus dollars in a lump sum after her Husband passed away as back compensation from date of death to the date of the payment.

How will this effect her if she applies for Medicaid?

Also, if she bought a used vehicle with this money (her current vehicle needs replacing) what effect is this on Medicaid qualification?

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Old Sailor, so your thinking the "death benefit" is really Mom now getting Dads full SS. This makes sense. It really is a mute point if she is not getting Medicaid. Its an income she can spend however she wants.
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I may be wrong here but, it may be the increase to her check from his account. Some spouses get an increase like that if the surviving souses check was smaller that the deceased spouses check.
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This is complicated. See an elder law attorney.
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I don't understand. Death benefit is $255. Is what she got from SS money held back in error, found they were wrong and then sent it? I know there has been confusion to when someone passes during a certain time of the month if that person deserves the last payment. But I have never heard of lump sum death payment.

So in my opinion, that is income and she has a right to spend it. Her Medicaid is going to be based on what she has in the bank at the time of applying and any other assets she has that need to be spent down. She spent that money for herself so I see no problem, just make sure the paperwork is kept to show that in case questioned. Now if she had gifted that money, whole different thing. Then there maybe a penalty.
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Personally I wouldn’t fret on this, as she can get the $ spent down on things that are legit for Medicaid.
If it’s LTC Medicaid (like in a facility) that mom will be applying to, they look at “income” and “assets” that she’s at as of date of application and then what she did with $ received 5 years prior. She has to be “at need” financially for Medicaid.

LTC Medicaid has it basically at 2k max for “non exempt assets” for individuals. Non exempt Assets are like savings, investments. Exempt are her home if primary residence, a car & both under a set value.
For “income” that varies by state, most abt $2100 a mo max. Income is like monthly SS payments, retirement income.

So when she eventually applies that SS$ will appear in that months bank statement as a deposit (so it’s income that month) and as Medicaid will want a copy of (Statements) as part of her LTC Medicaid paperwork, Medicaid will know abt the $. Her Medicaid caseworker might ask her (you) as if it’s a 1 time item or repeating, so you want to have the letter for SSA at the ready to send / fax to caseworker. Comprende? Usually SSA$, any federal $, IRS refunds, etc. if their direct deposit will show on her bank statement the federal agency that paid. So caseworker has an idea what’s what on the $. It’s a 1 time payment that’s income for that month to your mom. Now the following month it then becomes an “asset”.

Mom does need to make sure her assets are below the 2k max allowed prior to her applying to LTC Medicaid. What she spends any $ on only for her care, her property, her needs.
Absolutely no $ to you, others. No “gifting”.
She can pay you to be her caregiver but there needs to be a legit, drawn up by an atty Caregiver Contract or Agreement. She can pay rent but it too must have a legit agreement. Both of theses involve taxes / IRS reporting. Stuff like this not a DIY but need elder law atty.

Remember it’s a 5 yr lookback possibility. So go thru her financials to make sure there’s nothing lurking that might be a issue.

Also often family gets all fixated on financial aspect of LTC Medicaid.
and this is VERY important,
she must also be “at need” medically for long term care, which for most stats Medicaid is care in a NH. So she will need to show she needs skilled nursing care. Being old, or needing some help with her ADLs or her medication management, are not likely to be enough. Her doctor just writing a script that she needs a NH on its own not enough. She will need a detailed health chart that clearly shows skilled care needed (if it’s a NH that Medicaid pays for in your state). So please please review her health info with her doctors way ahead of filing her application. She can have a needs assessment done too.

Most NH admits get done in that they are living on their own & fall; so get hospitalized (Medicare pays); then discharged to rehab at a NH (Medicare rehab benefit pays 100% for first 20/21 days); then it’s determined cannot return home once rehab in-patient care ends, so they stay at NH & have a nice big fat health care chart that shows “at need” for skilled nursing care as a LTC resident. & LTC Medicaid applied for.

Have to be “at need” both financially and medically for LTC Medicaid.
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The way I understand it, as long as the money is used for her in some way, it will not have any detrimental effect. But she cannot gift it in any way to anyone.
Each state has its own guide lines and rules, so lease check out the rules on her money spending.
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