How do I ensure my mother remains eligible for Medicaid now that my father has died and left her a small life insurance policy and house?

Your question is a valuable reminder for married couples, and anyone else who has a loved one who needs Medicaid to cover nursing home care.

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.

This is something important enough that you really need to contact an elder attorney ASAP--like today. They can tell you exactly what you need to do, and if there is a timetable you need to follow. I've had to do this several times during caregiving, and it was money well spent. The thought I always had in the back of my mind is that if I do it wrong, the money will be gone, and you'll never get it back.

You can prepay her funeral with the 10K. Talk to the funeral director you would use. He can set up a trust. The 10k is average if you do a traditional funeral. That can include flowers, stone, luncheon. When u get the copy of the trust give a copy to Medicaid for their files keeping ur copy.

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 life insurance money will count as income for the month she sold it. But she’s using it to pay for her husband’s burial right? Then it will be spent down and shouldn’t affect her eligibility. The house doesn’t have to be sold unless she already owns another house. If she doesn’t own any other property, then she can keep the house. It doesn’t have to be sold unless she wants to sell it.

Thanks to all for the helpful responses. My sister and I have reached out to a local attorney to help us sort through the issues. I think the spend-down won’t be a problem, but we’re not leaving anything to chance.