Politics Using Medicaid to protect inheritances

01:00  11 june  2021
01:00  11 june  2021 Source:   thehill.com

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You could continue to pay for commercial health insurance or COBRA through their employer, if it’s available. You could purchase their house from them and continue the payments for them. I don’t know if Medicare assesses the fair market value of your “ inheritance ” I’m assuming it is a house. I know people who were getting disability payments each month and received an inheritance . They found out that they could not receive assistance from the government AND get welfare for their disability. The friend decided that the monthly disability payments were worth more than the inheritance , and did not

If the inheritance is rather large, and the Medicaid recipient will be comfortable without Medicaid assistance, then the process ends here. After you inform Medicaid of the change in circumstances (i.e. the large inheritance ), Medicaid benefits will cease and the former Medicaid recipient will private So, for example, if a Medicaid beneficiary inherits ,000.00, think of how they may want to spend that money in the same calendar month in which it is received. Examples include using inherited money to: pay off credit card debt, pre-pay for funeral expenses, purchase a new big-screen television or laptop

The number of Americans over 65 increases by about 4,000 each day, causing the finances of many government programs to become more precarious. While Social Security and Medicare receive the most attention, a growing concern is the reliance on Medicaid to pay the nation's long-term care needs.

a person sitting at a table using a laptop: Using Medicaid to protect inheritances © Istock Using Medicaid to protect inheritances

Medicaid pays nearly half the nation's long-term care bills, and improper payments in the program exceed $100 billion a year. Conventional wisdom is wrong that seniors need to spend down to gain Medicaid eligibility for long-term care. Seniors can make a sizable income (medical and long-term care costs are deducted before determining eligibility) and hold large assets and still qualify for Medicaid. These assets include home equity of $603,000 in most states ($906,000 in nine states) and generally unlimited amounts in retirement accounts.

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Medicaid law imposes technical requirements, such as proof of residence and having a social security number, but it also imposes financial requirements that set very strict asset and income limits. In many cases, receiving just a one-time payment of ,000 or more can cause someone to lose their Medicaid . Some exceptions apply, but gifts, inheritances , and personal injury settlements can all cause someone to lose Medicaid . Worse still, many Medicaid programs also impose transfer penalties, which means that giving away assets to friends or family members will not protect Medicaid eligibility.

Receiving an inheritance can complicate matters with Medicaid . It could mean you have to drop coverage and even pay back for some of the care received. But if you want to preserve your Medicaid eligibility, you need to take extra steps to ensure that any inheritance isn’t received outright. "The idea is to have the beneficiary receive the inheritance in a protected vehicle where it would be accessible with safeguards but not deemed an available resource or asset for the Medicaid recipient," Shah suggests.

With minimal prior planning, child heirs can preserve their inheritance by arranging their parents' finances and assets so that Medicaid picks up the tab in the event long-term care services are necessary. A cottage legal industry has emerged to assist heirs in creating such wealth management schemes.

The ease with which people can gain Medicaid eligibility for long-term care creates a major moral hazard problem. Since the government is paying, people don't need to properly plan. A prominent economic study found that Medicaid largely crowds out the market for private long-term care insurance. While gaining access to Medicaid long-term care is too easy, one aspect of law in this area that makes sense is now under threat.

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Through the creation of certain irrevocable Supplemental Needs Trusts, you can protect your Medicaid benefits in the event you are the recipient of an inheritance , personal injury claim or divorce award. It is best to seek the advice of an experienced Elder Law attorney regarding the right plan for your particular situation. For many clients, this is the most important estate planning document. It is particularly helpful if you become incapacitated. A properly drafted power of attorney can avoid certain costly legal proceedings and can serve as a tool to protect your assets if you require nursing home care.

When a Medicaid recipient receives an inheritance , it is counted as income in the month that it is received. This means, more likely than not, a Medicaid recipient will be over the income limit for the month, and he / she will not be Medicaid eligible during that specific month. There are also much more complicated planning techniques, such as the Modern Half a Loaf Strategy, which can protect some of the inheritance for other relatives. Unfortunately, this strategy violates Medicaid ’s look-back rule. However, it is possible to implement it if a Medicaid recipient still has enough funds to pay for

The Omnibus Budget Reconciliation Act of 1993 required states to recover long-term care costs borne by the Medicaid program from the estates of deceased recipients. The primary asset in most estates is the home, and U.S. seniors hold $7 trillion of home equity. This law sends the message that Medicaid would pay long-term care bills, but the tab, or at least a portion of it, would be paid out of the deceased person's estate. It was essentially a government-backed loan for people who failed to prepare to pay privately for long-term care. It isn't welfare if it's paid back.

For many reasons, it would be better to limit eligibility to Medicaid long-term care on the front end, but the existence of Medicaid estate recovery efforts avoids some amount of moral hazard. Unfortunately, a powerful Medicaid advisory board is recommending that Congress eliminate the requirement for states to pursue estate recoveries.

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My mother has been on medicaid for 8 years and has no assets. She is currently in poor health but just found out she will be receiving an inheritance from her late brothers estate before the end of the year. I am wondering how she can spend this money and on what? After purchasing clothes, new wheel chair, dental work etc can she purchase gifts for her grandchildren for birthdays and christmas? Are there limits on what she can purchase for herself? I don't think her money will run out but also don't want to limit her chances of going back on medicaid if needed.

If you want to qualify for Medicaid and protect your assets then this guide is for you. Easy to follow advice to help you qualify. In this article, we are going to cover the topic of protecting your assets from Medicaid . You may have heard of this possibility previously but not quite known what it was all about, or how it could work for you. We hope that you will be better informed by the end of this piece, and you’ll be able to move forward with the process of planning your next financial moves.

This board, the Medicaid and CHIP Payment and Access Commission (MACPAC), says the fear of estate recovery discourages people from applying for Medicaid, and recovery efforts tend to keep poor people poor. But MACPAC's rationale makes no sense. States cannot recover funds expended on behalf of people who lack assets. Estate recoveries only affect people who have resources left over and generally died without a spouse.

MACPAC also claims that estate recoveries do not produce a lot of revenue. That's true, but fixable. After the 1993 federal requirement for estate recoveries, states did not implement robust recovery programs, the federal government did not enforce the law and the media didn't publicize the new estate recovery liability. As a result, the public continued to ignore long-term care until they need it, turning to Medicaid by default if they do.

Here's our advice. First, don't make the problem worse by eliminating estate recovery requirements. Doing so will further reduce incentives to prepare properly for long-term care expenses. It also would permit more heirs to shift costs that their parents' estate should bear onto taxpayers. Government should provide Medicaid for the truly indigent but allowing middle and upper-income Americans to preserve a greater inheritance weakens the safety net for those who most need it and is unfair to taxpayers and those who prepare properly.

Second, the government should enforce and publicize Medicaid estate recoveries. This would reduce dependency on Medicaid, preserve Medicaid for the truly needy and encourage responsible private behavior. As federal deficits and debt explode, it has never made more sense to limit welfare programs to those who are poor.

Steve Moses is president of the Center for Long-Term Care Reform and author of "Medicaid and Long-Term Care" (2020). Brian Blase served as a special assistant to President Trump at the National Economic Council, 2017-19. He is president of Blase Policy Strategies LLC.

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usr: 1
This is interesting!