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Medicaid Redeterminations – Part 5

In my post last week, I talked about what happens when the healthy spouse dies leaving a surviving spouse who is on Medicaid.  The elective share requires that a minimum amount – 1/3 of the deceased spouse’s estate less what the surviving spouse already has – must go to the deceased spouse.  With a Medicaid asset limit of $2000, anything received upon the first spouse’s death will cause complications and must be worked through.

Let’s look at an example.  George and Mary owned their home, other real estate that George and his siblings inherited from their parents and stock and bond investments.  Before Mary applied and was approved for Medicaid, we had George purchase a Medicaid annuity to preserve some of the liquid assets that exceeded the community spouse resource allowance that George was permitted to keep under Medicaid rules.  The residence was exempt under the primary home exception and the real estate was inaccessible and thus not countable because the other co-owners refused to sell.  But that all changed once George died.

As I explained last week, the augmented estate must be determined.  We must first count the estate expenses such as funeral, estate administration and legal fees and other outstanding debts such as George’s unpaid medical expenses.  There are often other assets that may go directly to Mary bypassing any instructions in George’s will.  For example, some clients have health savings accounts.  Others are insured with companies that have subscriber accounts which are considered the policyholder’s money but applied by the insurance company towards premiums.  When the policyholder dies the funds usually are distributed to the surviving spouse.  This is what happened in George’s case.  Mary received this money directly into her bank account after he died.

This all completely changed Mary’s financial picture.  She appeared to now have more than $2000 in countable assets – or did she?  Next week I’ll answer that question.