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How Do Inheritance Rights Affect Medicaid Eligibility?

Death of Recipient of Medicaid Benefits. What happens when someone is in a nursing home receiving Medicaid long-term care benefits and his or her community spouse dies? Do the children or persons named in the Will inherit the house, savings and other assets? Will Dad’s Medicaid be affected?

Case Example. The typical situation is where a spouse is in a nursing home receiving Medicaid long-term care benefits to pay for the nursing home costs, and that recipient’s spouse living at home or with family predeceases the recipient. In this example, Dad is in a nursing home and the nursing home has been receiving Medicaid payments for 20 months. Mom continued to live in the marital home. The deed to the house is in both spouses’ names. The value of the house is $280,000 and has a mortgage of $180,000. Mom has $80,000 in savings in her name. Mom’s Will leaves everything to her two children equally. Medicaid payments to the nursing home total $130,000. Estate assets total $180,000. On these facts, if Dad died before Mom, there would be no Medicaid repayment issue. But Mom died before Dad.

Duty to File Claim For Spousal Elective Share. Under Maryland law, as the surviving spouse Dad is entitled to a portion of Mom’s estate. Even if Mom left Dad out of her Will, or disinherited him, Dad has this right. However spousal elective share is not automatic. Dad, or his representative, must file a claim for spousal elective share with the estate, within the time limit, or he will lose his right to inherit.

Medicaid Lien; Notice. Medicaid State Recovery will have a lien against Mom’s estate for reimbursement of the Medicaid payments made to the nursing home for Dad’s care. Even where Dad dies after Mom, the Personal Representative of Dad’s estate must file the claim for his spousal share and notify State Recovery so they can file their claim.

What Happens if Dad’s Spousal Elective Share is Not Claimed? Medicaid treats Dad’s right to inherit as his money and as “income” to him. These funds need to be applied to Dad’s cost of care or to reimburse the State for Medicaid payments to the nursing home for Dad’s care. If Dad’s representative fails to timely pursue the claim for the Medicaid recipient’s spousal elective share, those funds will be treated as a gratuitous “disposal” of Dad’s assets, which could result in Dad losing his eligibility for continued Medicaid eligibility.

Personal Liability. Dad’s representative on file with the Dept. Of Social Services may become personally liable 1) to State Recovery for not protecting money that should have been used to reimburse the State; 2) to the nursing home for its financial losses arising from the loss of the Medicaid payments for Dad; and 3) to pay for Dad’s nursing home care at the private pay rate, currently close to $11,000 a month, until the Medicaid penalty period ends and Dad is recertified eligible to receive Medicaid benefits. .

Rob Goldman, an experienced Maryland Elder Law attorney with offices near you, can provide you with the legal guidance you need to make informed decisions and avoid costly mistakes. Advance planning can protect more assets and income, reduce risk and stress, and bring you and those you love Peace of Mind!