One of the most dreaded possibilities following Medicaid approval is a change in the Medicaid recipient’s situation, and one of the most common changes is the receipt of funds from the estate of a deceased family member.

In a previous post, we discussed the need for any at-home spouse to update their estate plan to ensure that any assets passing to a spouse in care are done so in a manner that will not jeopardize the ongoing Medicaid approval of the in-care spouse.  However, even if the at-home spouse takes care of things, there are always situations that can arise.  One of the more common ones involves the in-care spouse receiving an inheritance from a parent or child.

If an inheritance is received, the first thing to do is contact your Elder Law attorney if you worked with one.  If you didn’t there are some important things to remember:

• You have thirty days in which to report the receipt of assets to the Department of Social Services where Medicaid was applied for. If you fail to report within thirty days, you may be responsible for reimbursing the State for funds expended on behalf of the Medicaid recipient while they were ineligible.
• If the amount is small and can be spent on the needs of the Medicaid recipient, be sure to complete the spending prior to the last day of the month in which the inheritance is received.
• If the amount is large, you still may be able to spend it down before the last day of the month. Consider prepaying for the individual’s funeral in full or paying off any outstanding obligations.
• If there is an at-home spouse, consult with your Elder Law attorney about transferring the inheritance to the at-home spouse.
• Do not give the money away to others – it will cause a period of ineligibility.
• Do not sign a renunciation of your interest in the inheritance (or on behalf of the individual) – a renunciation is considered exercise of control over the asset which Medicaid views as a gift.

If, at the end of the month, the individual still has more than $2,000.00, they will need to pay privately for their care until they are back below $2,000.00.  Again, an Elder Law attorney will be able to guide you through this process in a manner that is beneficial for the Medicaid recipient and, if possible, for his at-home spouse, but do not wait – take affirmative steps to address the situation.

Many North Carolina Medicaid situations involve a spouse needing care and health spouse that can still live at home. During the Medicaid application process, there are steps that an at-home spouse will need to take to ensure that he or she is protected to the fullest extent possible from any adverse Medicaid claims.  However, following the in-care spouse’s approval for Medicaid, the at-home spouse should take some additional steps.

Adjust Your Estate Plan

If you work with an experienced Elder Law attorney, he or she will likely encourage you to change your estate plan in conjunction with the Medicaid application and spend down.  The reason is that if the at-home spouse dies before the in-care spouse, the assets that were shifted to the at-home spouse for Medicaid qualification purposes may end up going right back to the in-care spouse. If that happens, not only will the in-care spouse lose Medicaid coverage, but all of those assets are now subject to spend down and claims for estate recovery.

Unfortunately, changing your estate plan may not be as simple as hopping on LegalZoom and generating a new Will.  The at-home spouse will want to make sure that the assets are disposed of properly and that if the he or she predeceases the in-care spouse, that the assets are retained in trust for the benefit of the in-care spouse in such a manner as to not affect Medicaid eligibility.  If you own real property, you will want to make sure ownership of it is properly structured.  You will want to make sure beneficiary designations are changed. There are a lot of steps that need to be taken, not all of which can (or should) be taken without the guidance of an Elder Law attorney.

Keep Assets Separate

Once the in-care spouse is approved for Medicaid, there will be ongoing redeterminations to ensure that the individual still qualifies for Medicaid.  The important thing to remember here is that unless the at-home spouse also ends up applying for Medicaid, the Department of Social Services that handled the application will not look at the assets of the at-home spouse again.  The at home spouse can receive inheritances and build up assets without fear of needing to go through additional spend down following a redetermination.

However, the at-home spouse needs to keep their assets separate from the in-care spouse.  Do not add the in-care spouse to any new accounts that are opened or property that is purchased.  If it happens, Medicaid coverage may be terminated.

Maximize the Spousal Income Allowance

The at-home spouse is, in certain situations, allowed to keep a portion of the income of the in-care spouse.  However, there is a limit to what can be retained, and if the at-home spouse’s income is large enough, there may be no retention. The determination of how much can be retained is made by the caseworker during the application, but it can also be adjusted throughout.  If the at-home spouse’s expenses increase, be sure to contact the caseworker and request a reassessment of the amount allowed.

Being approved for Medicaid is a relief, but it is important for the at-home spouse to stay aware of the situation and make sure that they are doing everything possible to protect the spouse receiving care and themselves.

 Having a loved one receive a Medicaid approval notice normally provides the family the chance to breathe easily.  However, some responsibilities don’t stop once someone is approved.

A Medicaid Approval/Denial Notice looks like this in North Carolina.  The first section, marked “Approvals”, outlines who has been approved, the program for which they have been approved, the months that are being covered and, most importantly, how much the person covered is responsible for paying to the nursing home each month.  That’s right, even with Medicaid a person may still have to pay something for his or her care.

This amount is called the “Patient Monthly Liability” or “PML”, and it applies to both the long-term care and special assistance programs.  It is based on an individual’s income, but there are certain allowances: personal needs ($20 or $66 per month, depending on the program), supplemental health insurance and, in situations where there is a spouse at home there may be an allowance made for that spouse to keep some of the other spouse’s income.  The PML has to be paid every month, or the person may be discharged from the facility, regardless of Medicaid status.

It is important for spouses to remember that none of their income needs to be paid as part of the PML.  If the PML assigned to the Medicaid recipient exceeds the income of that individual, contact the caseworker for clarification.

The bank account of the Medicaid recipient has to have a balance of less than $2,000.00 on the last day of every month.  Many times clients are concerned because the Medicaid recipient’s monthly income will push the account balance over $2,000.00. That income is supposed to go to either the nursing home or the at-home spouse, meaning that it should be leaving the account at some point during the month it came in, so just because the account balance may exceed $2,000.00 at some point during the month is not a problem – it is the end of the month that counts.  If the Medicaid recipient’s account happens to build up to the point that it exceeds $2,000.00 even after payment of the PML or transfer to the at-home spouse, some of that money should be spent of the personal needs of the recipient to bring the balance back below $2,000.00  Failure to keep the person’s “reserve reduced” could result in termination of benefits.

Finally, Medicaid conducts annual reviews of each of its recipients.  These reviews are conducted via mail, and involve reaffirming the person’s eligibility, providing any updates needed, and providing copies of bank statements. These reviews must be completed and returned, or coverage may be terminated.

As outlined above, Medicaid approval does not mean an end to paperwork or responsibility.  If you have questions about approval or ongoing eligibility, please don’t hesitate to contact us.