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Medicaid Redetermination – Part 7

In my blog post last week, I discussed the calculation of Mary’s elective share.  That is the amount Mary is entitled to receive as a result of her husband, George’s death, which turned out to be $300,000.  Obviously this is more than the $2000 in assets she is entitled to keep to maintain her Medicaid eligibility.  So, must she be terminated from Medicaid?  Not necessarily.

That’s because there is a choice as far as which assets Mary receives.  She could receive 1/2 ownership of the house, valued at $300,000.  This, by itself, would satisfy the elective share in its entirety.  The other 50% would pass to George and Mary’s children per George’s will. 

While this would leave Mary with an asset worth well more than the $2000 Medicaid asset limit, it would be co-owned with her children.  If they do not wish to sell the house so she can spend down her 1/2 of the proceeds, the house becomes what Medicaid calls an “inaccessible asset”.  That is one that can’t be liquidated thru no fault of the Medicaid recipient.  Medicaid does not include such assets when assessing the asset limit, thus preserving Mary’s Medicaid eligibility.

It should be noted that after Mary dies the home will be subject to Medicaid estate recovery, but limited to Mary’s interest which, again, would be 50%.  This means that whenever the home is sold the State will have a lien equal to the amount of benefits it paid out on Mary’s behalf.   Eventually it will be able to recoup at least some of those benefits.  Still, this is better than having to sell the home and spend the proceeds while Mary is alive because what Mary must pay in that case is at a much higher “private pay rate” than what the State pays at the “Medicaid rate”, after first applying Mary’s income towards her cost of care. 

Mary and George’s case is just one example of how complicated the elective share is but also of how navigating the elective share and it’s effect on Medicaid can be critical to achieving a more favorable outcome when it comes to preserving assets.