Receiving an inheritance is always a good thing—right? Unfortunately, if you receive Medicaid and you’re about to come into an inheritance, you might be in for a few financial challenges. Because Medicaid is a government-funded program, it has very specific income stipulations, and a larger inheritance could ultimately disqualify you from Medicaid, even if you already receive those benefits. Fortunately, there are a few things you can do to navigate this tricky situation.
Receiving an inheritance? Find out what you need to consider when it comes to your Medicaid benefits.
How Large is the Inheritance?
If your inheritance is significant, you might not need Medicaid benefits any longer. However, smaller inheritances might not be enough to keep you comfortable, so it would be in your best interest to see what you can do to preserve your benefits as best you can. As a rule, Medicaid only applies to individuals who maintain assets below $2,000, so if you receive a lump sum inheritance, it might be in your best interest to disperse your inheritance in a beneficial way, that way you can still receive Medicaid.
Medicaid is based on financial need, so if you deplete your finances by the time Medicaid eligibility is considered, you could still receive those benefits. However, if you choose to spend down your inheritance you must do so wisely, otherwise, you risk making a detrimental financial move.
Each situation is different, so you should always consult a professional before taking matters into your own hands. However, in most cases, it’s smart to pay ahead of time for your nursing home or residence, and you could put some of the money away in a trust for your children or grandchildren. You might also pay in advance for funeral contracts, burial services, and so on. For many people, planning such things in advance also gives them peace of mind.
Using a Special Needs Trust
If you are under the age of 65, you might want to consider the benefits of a self-utilized special needs trust, or a pooled special needs trust if you are over 65. In either case, creating a special needs trust could help keep your money safely tucked away and managed in a way that benefits you. You’ll receive the funds you need for your monthly expenses, and you could still qualify for Medicaid as well.
Contact Legacy Enhancement to find out how you can maintain your Medicaid benefits and about our free consultations.