My mother passed away in April 2014, and had designated my father as the primary beneficiary of her life insurance policies, stocks, and annuities. I'm an only child, and I was the secondary beneficiary for those items.
Am I correct in thinking that ALL of this money that my father has received as a beneficiary must be spent down before he is able to receive Medicaid? Is there any way at all to protect these funds?
One word of caution in all this is if instead of your folks having a true stockbroker wire-house firm (Series 7 type of broker) they instead were with a firm which is more of a insurance company who also does "investments". Those tend to steer to putting monies into an annuity (annuities are an insurance product & with a hefty commission & withdrawal penalties). For Medicaid, most annuities are not "Medicaid compliant". Personally I would get Mr Heiser's book as it explains what this means. There are pretty specific guidelines for them to be Medicaid compliant which varies by state as each state administers uniquely their Medicaid program. In general one big item is that the state is the beneficiary of the annuity and often requires reporting to the state of the annuities invested funds, interest earned, sales commission paid, etc. Most insurance companies aren't selling product that can pass Medicaid review & terms.
Whatever you do please try to be super organized & keep track of all your parents documentation and details. What I've found is that the initial Medicaid caseworker (assuming you do apply for Medicaid for Dad) just does not have the training to evaluate investments or insurance products. If Dad's zip code is viewed as affluent & he has investments, it is my belief that his application will be red-flagged for a detailed review. The secondary reviewer has some degree of forensic training and will find something that you will need to provide details on (& justifies why a secondary review is needed!). So you want to be able to find whatever Medicaid asks for in short order. For my mom's TX Medicaid NH application, she had an insurance issue because her policy was super old, like 30 pages in length & also was paid up and so produces a dividend. Now under the policy, the dividend gets plowed back into the policy. Mom cannot get a check for the dividend, it has to go back into the policy. Medicaid review picked up on this and I had 72 hours to provide documentation that it was fully a NCV term policy. I got my broker who is Louisiana - but who also holds a TX insurance license - to review & do a letter stating it was term & no cash value so all was good. But it is things like this, that will drive you loco in dealing with the mice-maze that is Medicaid.
If you all have the ability to private pay for Dad @ the NH or to keep Dad @ home for maybe 3 - 4 months, that should give you enough time to get a handle on his investments, liquidating them and meeting with both their stockbroker and an elder law attorney to come up with a game plan on how best to provide for Dad that is kosher for Medicaid.Personally I would not apply for Medicaid now as it totally exposes Dad's financials (as you sign off to allow the state an all-access pass to anything tied into Dad's name or SS #) and doing this now sets him up for transfer penalty review. Good luck... none of this is simple or easy.
In the mean time don't go spending it willy nilly!! If Dad needs to apply for medicaid in the next 5 years you'll have to account for your spending and probably have to pay it back..
Thanks for any explanations.
Schedule a meeting with your father, an Elder Care Attorney, and his finance person for they all need to be on the same page in helping navigate the paperwork. Make sure he has his funeral expenses taken care of and if not pay that expense now because the cost keeps rising.
Remember that money is to take care of him first and believe me as much as we love our parents it is less of a heart break or stress if when the time comes for them to be placed in a facility to do it. Don't be heroic and have them live in your home and you be their caregiver and interrupt your life for you will regret that.
Good luck in this new phase of life for it will be stressful, but when you research and follow through you will be glad you did t.