Medicaid Redetermination – Part 6

Picking up where I left off in my blog post last week, George died leaving his wife, Mary who is on Medicaid which has a strict asset limit of $2000.  While George was alive we had him change his will to leave Mary only the minimum amount required to satisfy New Jersey’s statutory elective share, however, as I explained last week there are often assets that pass outside the will automatically to the spouse.  That’s what happened with Mary.

Any assets received must be spent down in a month to preserve Medicaid.  That’s not easy to do since there isn’t much that Mary needs.  Alternatively, the money can be turned over to the State to then remain on Medicaid.  The State will seek to be reimbursed under estate recovery rules when Mary dies anyway, so this can be a good option – provided Medicaid isn’t terminated before the family realizes the money received is a problem.

George had other assets as well.  He owned the marital home and he had some liquid assets as part of the community spouse resource allowance that he was entitled to keep.  He additionally inherited money from his brother who died after Mary was already on Medicaid.  Under Medicaid rules, his receipt of this inheritance didn’t knock Mary off Medicaid but now that he died it became part of the elective share calculation.

The house was worth $600,000 and George had other liquid assets of $325,000. The subscriber account money that was paid directly to Mary was $10,000.  Subtracting out estate administration expenses and outstanding debts, the augmented estate was $900,000.  Mary’s elective share was worth $300,000, well more than the $2000 asset limit.

So now what?  Does Mary have any options?  I’ll get to that next week.