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My mom is in a nursing home now and has been on Medicaid for most of this year (since my dad passed late last year). She received a large tax refund in April (was a joint return). Can some of it be spent on a memorial plaque for my dad? I haven't followed through on the plaque yet as I don't want to create an issue with Medicaid. Is it true that a tax refund can be spent as wanted within 12 months? (I read that on one lawyer's website but haven't seen it anywhere else). With this and another unexpected refund (from the assisted living facility where they had resided), her account has stayed close to the maximum allowable assets. Thanks

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This is a question for Medicaid since half the money is Dads. The rest you are going to need to spend down. If Mom does not have a prepaid funeral, u can use the money for for that. If Medicaid won't allow the plaque then get one when Mom passes from the prepaid funeral money.
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I think you need to have a talk with the Medicaid caseworker for her or if this facility has a caseworker for them (or their Zipcode) then that caseworker.
BUT
before you do this you need to get a bead on dads legal / probate standing and a timeline on the situation figured out which means gathering documents together AND a tentative plan as to how to deal with and spend the tax refund windfall.

Timeline issues: Did mom enter the NH before or after dad died???
- If it was before, has any re-evaluation been done on her Medicaid eligibility? Her financials should have all changed somewhat after he died, so Medicaid needed to do a reset. A lot of states have basically rolled over eligibility due to Covid…. If that happened, it will resurface and you as a good POA want to be prepared.
-if it was after he died, her eligibility was based on her financials post death.
whatever the case, IRS refund should have been reported to Medicaid once it was received by mom as it was a change of income the month received / deposited into mom’s checking account AND became a change in assets all months afterwards.

That didn’t happen now, did it? Ok so when this gets noticed, when it finally surfaces, you go to “Covid made it difficult to deal with yada yada” as your excuse. If the $ is till there, Medicaid will b ok on this.

What JoAnn brought up regarding the IRS $ being joint is very VERY important. 50% of it is your Dads. So what did his will read as to distribution of his assets?
- If it was everything over to mom, then I bet she’s going to determined to be ineligible & has a spend down till she’s back impoverished
- but if Dads will had his assets over to the kids or others plus mom, someone is going to need to deal with probate court filings to get this done for his estate with the IRS properly distributed.

i would suggest that mom (you as her POA) do NOT spend any of IRS $ till you get a fix on who gets dads 50% as per his will is determined.
If mom spends the $ to buy that headstone for dad, or buy anything that is not directly for her care or her needs (like replacement of toiletries, clothing, eyeglasses, walkers, etc) it will be considered “gifting” by Medicaid. Gifting places her eligibility Medicaid into question and it can be suspended or canceled till worked out. You don’t want to go there if you can help it.

I’d suggest that you look into things mom can buy and do a list with estimates to have on hand to get clearance from Medicaid AFTER you get a solid determination as to dead dads % of the IRS refund.
Like you get an estimate on fully paid preneed for mom. Or for new eyeglasses, hearing aids, walker or specialized wheelchair. If she’s still able to, maybe dental care.

let say the refund was $28,000 w half to momand his will has it as 50/50 mom & you. Mom gets 14k. & let’s say mom has a preexisting checking account w $1200 in as an exempt asset allowed by Medicaid, So mom now has $15,200 & you have 14k. Ideally she will find things totally legit for Medicaid to buy within a single month to get her back under 2k in assets. So she starts the mo at $15200 plus her SS income and then she pays the regular Medicaid copay and buys a fully paid preneed @ 10K for herself, new pairs eyeglasses & hearingaids $2,2oo, wheelchair $2k, her 50% of legal fees $1k. All done within the month. She ends the month back impoverished and under 2K in assets so ok for LTC Medicaid.

But imo you gotta have a plan. It’s already beyond 8 mo that IRS $ is just there. If you have a plan on spending that is all for moms needs or mom’s future (the preneed funeral or burial), in my experience, the caseworker will be ok on this. Good luck.
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igloo572 Dec 2021
Ok my bad on the math, sorry: say IRS refund is $ 28,000.
Then 50% / 14K is moms and 50% / 14K would have been dads. If dads will was done so that the % distribution on the assets of his estate was to be be 50% to mom and 50% to his kids after whatever fees needed to have his will done and recorded.
Let’s say a small estate affidavit needs to be done & all in those costs are $ 987.65 which leaves $13,012.35 or $ 6506.18 ea.

This mom now has $14k + $6506.18= $20,506.18.
This 20 large will need to get legitimate spent down in order for her to remain on Medicaid. Just what can happen, imo, will depend on how organized of a case (with estimates) you can present to the caseworker as to being able to spend out the entire amount within a single swoop in a month for her care or her needs. All done so that she ends her month once again impoverished for Medicaid with just her SS & any other income within Medicaid limits and her exempt assets under 2k.

back to the example…. $20,506.18. If she does not already have a fully paid preneed funeral and burial, that’s a legit spend down. States tend to have max spend on these of 10k. So $20,506,18 - 10k = $10,506,18. Mom could spend $ 4,506.18 to buy new pairs of eyeglasses, hearing aids, entire new sturdier wardrobe. And spend the remaining 5K on a specialized wheelchair or dental work. Money gone.

Issue will be if your states Medicaid will be agreeable on this. They could well say, “she’s beyond the limit on non exempt assets & off LTC Medicaid” and transfer penalty placed based on $20,506.18 plus whatever $ she might have as her exempt asset in a checking account she still maintains. If state takes this route, she will need every cent of the IRS refund $ to private pay for the # of days the transfer penalty placed. Daily private pay rate will be more than Medicaid reimbursement rate, so mom will likely need more $ than that $20,506.18. It may end up that you end up using your share of the inheritance to pay for some days.

A rub with transfer penalty is that it is NOT a $-4-$ penalty. It’s actually based on your states daily room&board reimbursement rate paid to a NH for those on LTC Medicaid. Average is $180.00 a day. $20,506.18 divided by $180 is 114 days of ineligibility. Yeah 114 days; almost 4 months that mom would be responsible to private pay the NH. She may even come up short to take it to the full # of days of ineligiblity. If a LTC Medicaid ineligiblity is determined, the State will send a letter on this to the facility she is in. State will clawback any payment to the NH. So NH will be aware and expect private pay payment made (& likely want family or POA to sign off a personal financial responsibility contract done) or they will send out a 30 Day Notice to leave.

State Medicaid could go all hard ball on this and kill her eligibility. This is why, imo, you need to have a plan with estimates to show that any probate issues have been / can be dealt with and have estimates on how to spend the rest and spend all within a month. It’s way easier paperwork route to have her declared ineligible. So again you gotta be to fully prepared to show good cause as to why to allow the excess $ to become a spend down on things for mom other than paying for her NH room and board.

stuff like this happens all the time. It won’t be a first for a caseworker to deal with. Most of the time it’s that the Medicaid elder is named a heir to a recently deceased sibling. These r imo actually easier to deal as Executor can slow walk the distribution. But if your mom has already gotten the IRS money and it’s been deposited into her bank account, it’s totally become an asset taking her over the Medicaid limit.
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