How Can Medicaid Beneficiary Use Inheritance to Update Bathroom?
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Question:
I have been getting Medicaid in-home assistance for approximately two years I am getting a unexpected check from an inheritance that I plan to use to replace a tub with a shower. But I won’t be able to do this within 30 days of receiving the funds. What can I do to not lose my in home help?
Response:
As you know, that could be problematic because because many states (and it sounds like this includes yours) have a $2,000 asset limit for Medicaid eligibility. During the month you receive the funds they are considered income. But if you don’t spend them down during that month, they are converted to countable assets. This occurs by calendar month, so you may not even have as long as 30 days. For instance, if you receive the funds on May 15th, the must be spent down by May 31st, giving you just 16 days. On top of this, of course, it’s usually not a good idea to pay the contractor their entire charge in advance.
One possible solution would be to transfer the funds to a pooled disability or “(d)(d)(C)” trust to hold the funds and pay out the contractor at the appropriate time. There would be some costs to this approach and you’ll have to ask whether the trust is willing to go to the trouble of setting up an account to hold the funds for just a short period of time, but it could be a good solution. You can find a list of pooled trusts here: https://specialneedsanswers.com/pooled-trust. Depending on the state, you may have to be younger than 65 years old to use this approach.
Another option might be to give the funds to someone you trust, in effect as an informal trustee. Depending on your state rules, you might not be subject to a penalty for transferring the funds to someone else to hold for you. While all Medicaid programs must impose a transfer penalty for nursing home care, they do not all do so for the in-home assistance you’re receiving. This entails some risk, but if you have someone who could act as an informal trustee or escrow agent, this might work
You might ask your state Medicaid agency as well. It may have a solution since it’s clear that you would only be holding the funds for a short period of time.
Finally, to get on my political high horse, our system is putting you in a ridiculous situation. Why should your vital health care be dependent on your level of assets and especially keeping them below such a meager level. The $2,000 figure for Supplemental Security Income, which is also used for Medicaid in many states, was set in 1984, almost 50 years ago. If it were just adjusted for inflation it would be $5,620 today, still low, but not quite as egregiously low. Advocates for lower-income and disabled Americans are pushing a bill, the SSI Savings Penalty Elimination Act, in Congress to raise this to $10,000. Here’s some information about it from The Arc: https://action.thearc.org/i4qGZj8?p2asource=empower.
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