My father died last week and until his death he had handled all the medical care and insurance logistics for my mother, who can’t walk and is in a nursing home. He did a terrific job of getting her eligible for Medicaid, but now with his passing the responsibility has fallen to my sister and me.
Dad left mom a small life insurance policy ($10,000) designed to pay his burial expenses. The will also calls for the house to go to her. Its value, after paying off the home equity line, is no more than $50,000- 60,000.
Questions: Will the life insurance payout be counted as an asset for my mom? Does the home cause any problems with eligibility? How quickly do we need to sort this all out?
Thanks - ML
The house is another thing. It has to be sold at Market Value. The proceeds will go towards Moms care. Meaning Medicaid will stop, the proceeds will need to be spent down and medicaid applied for again.
The reminder is: to check on your beneficiary designations and provisions in your Will and Trust documents to make sure that you are not leaving any assets to the individual person who needs Medicaid eligibility.
The assets resource standard for an individual is $2,000.
https://www.medicaid.gov/medicaid/eligibility/downloads/spousal-impoverishment/ssi-and-spousal-impoverishment-standards.pdf
Leaving the Life Insurance policy proceeds, and the house, outright to your mother puts the value of those assets in her ownership. She now has excess assets (assets over $2,000)!
The assets will have to be spent down on her care, unless there are non-countable assets (an irrevocable funeral contract, a car, a burial account) that can be purchased for your mother.
Talk with an elder law attorney in your state to learn about other solutions that may be open to your mother in your state that could continue her eligibility for Medicaid, rather than spending down the excess assets.
Perhaps your state would allow your mother to use the money to open a pooled trust account, or to pay you for services under a Caregiver Contract. Also, if you have a disabled person in your family, there are ways to set aside excess assets for that person without causing a disqualifying transfer.
The elder law attorney in your state can also help you learn whether there are a ways to use the money to pay necessaries arising from your father's passing.
For future planning, remember that a healthy spouse living at home can use their Will, and Will substitutes such as beneficiary designations, to direct their assets to anyone other than the nursing home resident, to protect the Medicaid recipient from disqualification. (It may also be possible to set up a Supplemental Needs Trust for a survivor that would make assets non-countable by Medicaid.)
Only a few states aggressively seek to take Medicaid recovery by demanding a spousal share of assets left by the community spouse to other people.