Receiving an Inheritance While on Medicaid

For most people, receiving an inheritance is something good, but for a nursing home resident on Medicaid, or those who rely on Medicaid as their primary form of insurance, an inheritance may not be such welcome news. Medicaid has strict income and resource limits, so an inheritance can make a Medicaid recipient ineligible for Medicaid. Careful planning is necessary to make sure the inheritance does not have a negative impact.

An inheritance will be counted as income in the month it is received. You or whoever is representing you will have to inform the state Medicaid agency, and Medicaid coverage will then end until you have again spent down your assets to the countable limit, which is $5,000 in the State of Missouri. If you receive an inheritance and the amount puts you over the income limits, you will potentially not be eligible for Medicaid for at least that month. If you can properly spend down the money in the same month it is received, however, you will be eligible for Medicaid again the following month.

There are strategies that can be used to protect some of the inheritance. You may be able to transfer the inheritance to an irrevocable trust, depending on the type of Medicaid received. You may be able to transfer to your child with special needs, or the child’s special needs trust. You may also pre-pay an irrevocable funeral contract or buy burial items for a close relative. It could also be spent on travel, dining out, clothes, television, DVD player, and paying off any debts you may have. To be sure, you will need to consult with an elder law attorney who has experience with the various types of Medicaid.