My mother has been on medicaid for 8 years and has no assets. She is currently in poor health but just found out she will be receiving an inheritance from her late brothers estate before the end of the year. I am wondering how she can spend this money and on what? After purchasing clothes, new wheel chair, dental work etc can she purchase gifts for her grandchildren for birthdays and christmas? Are there limits on what she can purchase for herself? I don't think her money will run out but also don't want to limit her chances of going back on medicaid if needed.
You or whomever is DPOA may not want mom to get the inheritance directly OR perhaps not at all (it goes to a special needs trust or another trust entity or even person) and you need good experienced legal to see if this is possible and how to structure it and the changes needed to go thru probate successfully.
When your mom applied for Medicaid, there is the acknowledgement that the state on behalf of the Medicaid program can be reinbursed for any & all payments made. So say the inheritance she receives from her late brothers estate is 500K; it can be attached by the state to pay towards what the state has paid out for her care for the last 8 years. If she has been 8 years in a NH and at 5K a month NH cost that would be 480K - so she would be left with only 20K and will have to spend that down to 2K in order to go back on Medicaid.
This sort of situation actually happens often when there is a younger healthy spouse who has a large life insurance policy with the older and in a NH on Medicaid spouse as the beneficiary - the young spouse dies in an accident and then the NH spouse now has this huge asset of $$ because of their being the beneficiary of the insurance policy and the state seizes the bank account to recoup the Medicaid $ paid out. Not pretty and usually takes family by surprise.
If your mom has been on Medicaid for 8 years that would mean about 2005 that she went on Medicaid. The Medicaid laws changed significantly in 2004/05 and then again in 2008 and the changes really involve how MERP is done and from what point in time Medicaid recipients are under MERP rules and what Medicaid programs are included (not just NH programs). MERP is Medicaid Estate Recovery (or Recoup) Program (or Policy). The "estate" part is the key as the state, since the state pays for Medicaid, can place a lein or a claim against your mom's estate after she dies. How this is done really depends on your states death (estate) laws and how probate is done. But when your state enacted MERP is going to be critical as far as from what point they can access the inherited money assuming your mom dies and there is still $ issues with her late brothers estate. The elder care attorney is going to know what's what for your state's program. This is not a do-it-yourself project or done by your nephew's old college roommate who does business law. Really truly.
If this is really a significant amount, you might ask your attorney to approach the attorney & the executor for your uncles estate to see if they can push back uncles probate till you work this out the best approach to deal with your mom's part of uncles money. I've been executrix twice and really you can wait a bit to even open probate and present letters and then you can run probate out for quite a while - alot of this depends on your states law and how agreeable the parties are on delaying settlements. Did one for 4 years and then got an exemption for another year as there were foreign wills issues (property in adjoining states) so it can be done if there are good reasons to do so. Good luck and find that attorney.
I haven't spoken to the executor of my uncles estate regarding making any changes because the only reason she is receiving anything is because the beneficiary isn't alive. Under TX law the money goes to the next of kin on either side of the family. It sounds like the estate has already gone through probate and they are ready to cut the checks?
What is the Medicaid Estate Recovery Program?
The Medicaid Estate Recovery Program (MERP) is required by the Omnibus Budget Reconciliation Act of 1993 (OBRA '93) to recover the costs paid by Medicaid for long-term care benefits received by certain Medicaid recipients. All states are federally mandated to implement the program. In Texas, the Health and Human Services Commission is the state Medicaid agency; the Texas Department of Aging and Disability Services is the state's MERP implementation agency. The funds collected by the state will be used to pay for future Medicaid community-based and institutional long-term care services.
Who is affected?
The state may make a claim against the estate of a deceased Medicaid recipient for covered Medicaid long-term care services when the recipient:
was age 55 years or older at the time the services were received; and
applied for covered Medicaid long-term care services on or after March 1, 2005.
Your situation is quite a bit different from most on this site who are dealing with elderly parents or older spouse with dementia. You dont need an elder law but rather an disability or estate planning attorney IMHO. If you have not yet received the inheiritance, this is good. Did you go the route of getting an attorney to do your SSDI? If so, I'd contact that firm to get a couple of names of disability planning attorneys. My thought is that they can get a special needs trust done for you so that the increase in $ doesn't effect what you get now. The SNT enables you to get things that you have to do without now as there is no $ to pay. SNT gets the inheritance. None of this is a DIY project, you need good legal to set it up. A disability attorney will have names of estate lawyers who they work with who understand the extra layer involved with disabilities.
If your disability is due to something when you were very young, you may be able to do something with the new in 2015 ABLE Act. google ABLE Act, young, disabled to see if any of it applies to your situation. I have a cousin who had polio in 1950's who has a SNT set up by his parents, I'm a trustee. We're exploring doing ABLE to be able to defund SNT a few years sooner. ABLE will allow the disabled to have up to 100k (@ 14k a year build) outside of Medicaid. ABLE also needs good legal to set up and the trust seems to only be able to park in certain banks. (this is kinda like how SBA only is available at certain banks) The states are just setting up ABLE. but if your disability started when you were younger, ABLE Act could be a very good thing. Good luck
I doubt you could make all the nieces & nephews to return the $$....
You know 17K isn't very much money. If mom could spend it all down within 1 mo she could /might not even change her eligibility status. Like mom starts & ends the month poor but gets & pays for dental work or other legit needs all with the month. My mom did a lot of spend down in dental and in retrospect it was really really worthwhile as teeth loss & gum disease lead to other health issues. With root canals & crowns running thousands it could seriously hit into the 17k.
A 10k funeral policy could get done as well but I'd bet that was already done?
She might be able to do a special needs trust but IMHO doing a trust for such a small amount isn't worth it IMHO.
There is the possibility to run out probate if your state allows for a longer probate (like TX is 4 years) so that the first layer heirs if themselves ill / elderly will likely die and second layer heirs get the assets of the estate. But if MetLife has already been contacted about the death, that option is moot.
You know states can do annual recertification for Medicaid in which you or whomever is the point person for the elder had to fill out. TX does this and there is a ? on any gifts, bequests, etc that has to be reported & you sign the form under penalty for omission and the elder gets suspended from Medicaid when they find out. I bet MetLife will do a 1099 misc income to mom for 17k. It will surface. Speak with legal but my bet is mom does more spend down.
125K would be a year or maybe 2 years of NH care depending on how costly. You should be able to Google the cost of care for your state as well as what your state Medicaid program pays NH for room & board. Like for TX, it's about $ 155.00 a day reimbursement rate, so it would be 806 days of ineligibility if she got the $ and lived in TX. East coast states pay lots more, some $ 350 a day, so the $ goes eons faster.
So how long ago did grannie get the 125K? and was she on medicaid at the time she got the 125K, right? If so, here's my thoughts on what happened:
- she became ineligible & did spend down to just 2K & reeligible for Medicaid
- she became ineligible and the state took whatever the state had paid to this point in time for her care from the 125K and she spend down whatever was left (if any) and became reeligible for Medicaid
- upon her death, the 125K which was still in her name & not spent became an asset of her estate and so subject to MERP recovery action. If she just died in April, that is really soon for MERP to do this (this depends on your state but it was 4 mo for the 1st MERP letter for us), plus MERP is a probate action and you didn't mention grannie estate going to probate. So I don't think this is what happened.
It's just kinda bad fortunata for grannie's heirs that she was on Medicaid and they end up with nothing while the others did. When they apply for Medicaid, they sign off an acknowledgment that MERP exists and that the state has to do an attempt of recovery by a claim or lein on the assets of the estate.
There's recently been a couple of other posters who have faced the same situation. Really if you know an elderly family member could be the beneficiary of a insurance policy, it needs to be changed before they apply for Medicaid. Often couples have each other as their beneficiary, bad bad idea as if the healthy non NH spouse predeceased the NH spouse, it totally is a problem for the NH spouse and who is there to deal with it for them then?
In my mind, and in the mind of probably 90% of the people in their state who are (through their taxes) paying for their loved one's care is so that they and "theirs" can inherit their relative/loved one's assets, rather than allow the assets to REPAY the state for their relative/loved one's care...care that they are either unable or unwilling to provide?
Does that sound like (1) they want to cheat their state out of what it invested in the care of THEIR loved one/family member and (2) a prime example of "the entitlement mentality" to anyone besides just me?
And no, I'm not Republican (ultra-conservative or otherwise)...I'm a middle-of-the-road Democrat.
Medicaid vs Inheritance was discussed in a recent AgingCare.com article:
If your mother is a nursing home resident, one option to consider is setting the money aside in a Pooled Trust, to supplement the care that the nursing home is providing. 42 U.S. Code § 1396p(d)(4)(C) allows a Medicaid beneficiary to put assets into a Pooled Trust established and managed by a non-profit association, with a separate account maintained for each beneficiary of the trust, solely for the benefit of individual, and as long as any money remaining in the beneficiary’s account upon the death of the beneficiary are paid to the State from such remaining amounts in the account an amount equal to the total amount of medical assistance paid on behalf of the beneficiary.
If available in your state, the pooled trust option lets you to set funds set aside, without losing Medicaid eligibility, so you will always have a reserve to pay for services and supplies your mother needs.
If you consult an elder law attorney near you, you can get complete advice on pooled trust accounts, the probate laws that may apply to your circumstances, and any other options that are available to help your mother.
The wording of the question tells me that in light of the inheritance, the OP's mom is coming off medicaid and wants to be careful about the way the money is spent in case her mom ever needs to re-apply for medicaid to go into a nursing home. She does not want to get bitten by the 5-year look back. Did I get that right? Nothing in her post implies she's trying to pull a fast one, or even stay on medicaid. She is simply try to plan ahead, to mitigate any problems now, so that if need be in the future, her mom can get care. That's reasonable.
I'm not an attorney, but I read a great article on this subject here this morning. The OP could get the money put into trust for her mom's use. Since it would be an asset of the trust and not of your mom, there would be no issue with remaining on medicaid. Consult with an elder law attorney on this.