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What Happens When the Healthy Spouse Dies Before the Medicaid Spouse? ( Part 1)

Joe and Mary had been married for 20 years, a second marriage for both.  They each had children from a previous marriage.  As they both aged and needed more care their respective children stepped in.  When Joe eventually needed nursing home care his daughter, Judy, handled his finances while Mary’s daughter, Melissa, took over management of her finances.

Judy and Melissa coordinated their efforts to spend down the couple’s assets and qualify Joe for Medicaid.  It all worked out fine, with Mary keeping the house and some liquid assets and Joe’s care in the nursing home being covered under New Jersey’s institutional Medicaid program.  As Mary’s long term care needs increased, she eventually sold the home and spent some of her savings.  Then Mary died and Melissa received a letter from the New Jersey Medicaid caseworker telling her that Joe could lose his Medicaid.

How could that be?  Judy had distributed her dad’s income to the nursing home and to Mary, as she had been required to do.  She was careful to keep his assets below $2000.  However, when Mary died Joe’s situation changed.  The first question was whether Mary’s will left any inheritance to Joe.  If so, then he would most likely be over the $2000 asset limitation.

Mary’s will disinherited Joe.  They had agreed that each would leave their assets to their own children and not to each other.  Judy told the New Jersey Medicaid caseworker this, but he wasn’t satisfied.  He told Judy that Joe was entitled to a certain amount as the surviving spouse, regardless of what Mary’s will said, under what is known as the elective share.  Judy had never heard the term before and didn’t know what to do.  That’s when her friend told her to call us.

Next week I’ll explain how New Jersey’s elective share works and what I told Judy she must do.