What happens if Nursing Home Medicaid recipient inherits money?

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HanSolo
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What happens if Nursing Home Medicaid recipient inherits money?

Post by HanSolo »

What happens if someone is a long-term nursing home resident, paid for by Medicaid, and they inherit money? Will Medicaid (which I guess means the state, as I understand Medicaid is a federal program that is state-administered) confiscate all (or most) of it? The person has social security income below the national average, and no assets to speak of.

This comment from another thread seems to indicate that the answer is "yes" (although this statement was made in the context of a different discussion):
Agcentral wrote: Tue Feb 20, 2018 5:26 pm It is clear that Medicaid will take every dime the aged person has as well as any income once they are accepted in a Medicaid sponsored nursing home.
A second question would be whether the person inheriting could avoid it being confiscated by refusing the inheritance (so it goes to other heirs).

I have a third question and I'm not sure it's worth a separate thread. Suppose a nursing home has both Medicaid and non-Medicaid residents. Does the nursing home collect roughly the same monthly payment in both cases (assuming similar accommodations/services)? Or is the nursing home forced to accept a deep discount in the Medicaid case?
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RickBoglehead
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Re: What happens if Nursing Home Medicaid recipient inherits money?

Post by RickBoglehead »

Anyone can refuse an inheritance, but whether Medicaid in that state will go after those refused funds or not I have no idea. Of course there is an ethical argument to be maid also.
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barneycat
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Re: What happens if Nursing Home Medicaid recipient inherits money?

Post by barneycat »

Medicaid is a federal program, but from my understanding, which you seem to share, it's largely run by the state. Because of that, the laws and how they are interpreted/executed very dramatically between states.

My firm advice: hire an attorney who is focuses on Medicaid/inheritances in that state and ask what your options are. You will likely have some legal options with a creative lawyer and this is one of those situations where professional services are absolutely worth the money.

Here are my short answers to your questions, based off personal experience:

1. The state will not confiscate the money, but it will view it as an asset and adjust its Medicaid payments accordingly. So, the recipient will not immediately lose the money, but rather will be responsible for paying the facility based off whatever calculation the state uses.
2. While one can "refuse" an inheritance, the state will likely come after whomever actually inherits the money because the refusal was an attempt to avoid paying taxes/for services.
3. Probably depends on the state and the facility, but the one I'm familiar with absolutely collects different amounts from non-Medicaid and Medicaid residents.

And here's my experience:

My father passed away a couple of years ago and hadn't updated his IRA beneficiary page to reflect me being born, so my mother was the primary beneficiary and his mother was the contingent. My mother had passed away two years prior and my grandmother (the contingent) was in a nursing home, on medicaid, with dementia. There was no way around it - the IRA balance had to go to her and the state viewed it as an asset in their Medicaid payment calculations. Everyone involved recognized that the situation was a clear mistake, but the law is the law and IRA beneficiary pages trump everything: wills, trusts, common sense, etc. We asked about "refusing" the inheritance but that was a no-go. In the end, we were able to salvage most of the assets through some creative lawyering and because my grandmother passed away after a few months. Not a happy ending by any stretch of the imagination and a terrible situation to put an entire family through.

So just as a plug to everyone, go check your IRA beneficiary pages and tell everyone you know!

Feel free to DM me if you have any questions. Good luck.
johnnyc321
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Re: What happens if Nursing Home Medicaid recipient inherits money?

Post by johnnyc321 »

The inheritance would automatically disqualify the person for Medicaid benefits so the payments would stop and the patient would then have to private pay until the assets are extinguished and then apply all over again for Medicaid. In Florida, the state becomes a creditor of the Medicaid beneficiary’s estate so if the person has assets that don’t count, it is beneficial to prevent them from becoming nonexempt probate assets.
stan1
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Re: What happens if Nursing Home Medicaid recipient inherits money?

Post by stan1 »

Has the person leaving the estate passed? One approach would be to "disinherit" the Medicaid nursing home patient.

As for your third question about facilities that have both Medicaid and private pay patients it is going to vary. The nursing home my MIL was in had separate wings of the building for Medicaid and private pay patients. The private pay rooms were single occupancy, quiet, spacious, and freshly remodeled. I would expect employees preferred to work in the less crowded private pay wing. The Medicaid wing was much busier. It was clean but worn. Another facility we looked at did not have separate wings.
carolinaman
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Re: What happens if Nursing Home Medicaid recipient inherits money?

Post by carolinaman »

When my mother went into a nursing home, she was on private pay. When she exhausted her own funds, Medicaid paid her nursing home bill. DSS (in VA) required me to put her home up for sale since no one was living in it. Proceeds from the sale would be used to pay her Medicaid expenses. She died before the home sold, but her estate paid her nursing home expenses that Medicaid covered.

I think it is clear that any assets someone has should go towards whatever expenses Medicaid paid on her behalf. I am not sure about the inheritance refusal and you should consult an attorney on how that should be handled. However, IMO, there is a moral obligation to pay one's expenses covered by Medicaid if you have assets to do so. Medicaid was established to cover nursing home and other expenses by those without resources and very low income. Those who are able to pay should.
FBN2014
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Re: What happens if Nursing Home Medicaid recipient inherits money?

Post by FBN2014 »

HanSolo wrote: Wed Oct 23, 2019 5:31 am What happens if someone is a long-term nursing home resident, paid for by Medicaid, and they inherit money? Will Medicaid (which I guess means the state, as I understand Medicaid is a federal program that is state-administered) confiscate all (or most) of it? The person has social security income below the national average, and no assets to speak of.

This comment from another thread seems to indicate that the answer is "yes" (although this statement was made in the context of a different discussion):
Agcentral wrote: Tue Feb 20, 2018 5:26 pm It is clear that Medicaid will take every dime the aged person has as well as any income once they are accepted in a Medicaid sponsored nursing home.
A second question would be whether the person inheriting could avoid it being confiscated by refusing the inheritance (so it goes to other heirs).

I have a third question and I'm not sure it's worth a separate thread. Suppose a nursing home has both Medicaid and non-Medicaid residents. Does the nursing home collect roughly the same monthly payment in both cases (assuming similar accommodations/services)? Or is the nursing home forced to accept a deep discount in the Medicaid case?
In this situation if it is still possible a trust should be created for the beneficiary with the trustee having full discretion as to whether or not to make distributions. That would protect the inheritance from Medicaid liens. That is what I was told by an attorney who specializes in this. That doesn't mean that Medicaid won't challenge the trustee but based on precedent they would probably lose in court.
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