By Paul Lorrah
When one spouse moves to a nursing home, many times it's expected that the spouse in the nursing home will be the first to die, but we see many times that this isn’t always the case.
What happens to a person's Medicaid benefits when their spouse dies first?
If the proper pre-planning steps aren't taken, the death of a spouse can affect the Medicaid recipients eligibility for Medicaid when the recipient inherits any assets.
In order to be eligible for Medicaid benefits, a nursing home resident may have no more than $2,000 in assets [Delaware]. The Medicaid applicant's spouse (called the "community spouse") can keep more assets. In general, the community spouse may keep one-half of the couple's total "countable" assets up to a maximum of $123,600 [Delaware, 2017]. When a married couples assets are great than the $123,600, the spouse applying for Medicaid can, under certain conditions, transfer assets to the community spouse.
The death of a Medicaid recipient's spouse can affect the amount of assets the Medicaid recipient has, and therefore his/her Medicaid eligibility.
For example: Joe is a resident in a nursing home and receiving medicaid benefits, his wife Jane [the "Community Spouse"] has the house and $35,000 in her name. If Jane dies before Joe and her Will leaves her estate to Joe, the additional assets will make him ineligible for Medicaid.
Even if Jane's Will does not leave anything to Joe, most states allow a spouse to claim a share of the estate [1/3rd in Delaware].
If the Medicaid recipient were to refuse their share of the inheritance, Medicaid will assess a penalty [refusal of an inheritance is the same as an improper transfer].
The couple's house will also become a problem. Since most spouses own property jointly, if the community spouse dies, the Medicaid recipient will own the house.
Once the home is owned by the Medicaid recipient it will count as an asset. There may be strategies available to have the home not counted as an asset, depending on the circumstances of the the recipient but either way, a lien would be placed on the home for Medicaid estate recovery. If the recipient were to sell the home, the funds received would make him/her ineligible for medicaid benefits until the funds were spent down at the nursing home.
Proper - pre-planning would have resulted in the couple's children receiving the home and assets remaining after the "Community Spouse" had passed.
To prevent a community spouse's death from affecting the institutionalized spouse’s Medicaid eligibility, it is important that the community spouse take the necessary steps to protect themselves, their children and the spouse in the nursing home.
To find out which plan will work best for you, contact us today. 855.471.6771