Inheritance Impact On Medicaid Eligibility
Jessica Fox Last Updated On: October 11, 2022

What To Do If You Inherit Money While Receiving Medicaid?

Medicaid is a federal and state run healthcare benefit for people with low-incomes. Eligibility varies between states, but typically those who make less than two grand a month are eligible for Medicaid. Inheritance counts towards your monthly income meaning that, depending on the amount, you may lose your Medicaid eligibility upon receiving an inheritance. 

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What Should You do If You Receive an Inheritance While on Medicaid?

Those who are on Medicaid might not be pleased about an inheritance coming their way if it means they are likely to lose their coverage, and understandably so. However, if you are on Medicaid and know that you will be receiving an inheritance sometime in the near future, you have options. It’s best to review your options and plan ahead so that you will be prepared for when the time comes. 

Speaking with an attorney who has your best interests at heart is recommended as they are equipped to give your proper advice on how to navigate such situations.

Here’s a list of the options that you may want to discuss with your attorney:

  • Check Your State’s Eligibility Requirements: As previously stated, each state may have different qualifications for Medicaid eligibility. Know what the maximum income requirement is for your state so you know whether or not your inheritance will make you ineligible.
  • Calculate How Far Your Inheritance Can Take You: If your inheritance does exceed eligibility requirements in your state, it might be enough to pay for your healthcare in place of your Medicaid benefits. Perhaps your Medicaid can fund your stay at a nursing home for a couple of months and then when the money’s gone, you will once again be eligible for Medicaid. Your attorney may also advise you on ways to “spend down” your money on things like relatives and food.
  • Put Benefit in a Controlled Vehicle: Another option is to put your inheritance somewhere that you can access just a small amount at a time through controlled means. This is a complicated process in which you will need a good attorney. But with the right guidance, it is possible to remain eligible for Medicaid and receive your inheritance without it being deemed an available asset. 

Can Medicaid Take Your Inheritance?

Medicaid is not able to take your inheritance money from you. The only situation in which they will take money from you is if they were unaware of the inheritance that disqualified you from receiving Medicaid until months later. In which case, Medicaid is entitled to be repaid the money that they are owed for the time that you received Medicaid while ineligible. 

It is also important to note that you absolutely must report your inheritance to Medicaid. Failure to do so can result in penalties, and Medicaid may even have grounds to sue. 

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What About the Inheritance I Plan to Leave Behind?

Medicaid may affect what you plan to leave to your relatives in the event of your passing. The state reserves the right to claim a Medicaid recipient’s estate after their death unless:

  • The recipient is survived by a spouse
  • The recipient has a child younger than the age 21
  • The recipient has a disabled or blind child of any age

Medicaid may also attempt to recover funds by putting a lien on your property, or a property that you’re due to inherit. Medicaid does this so that your property can act as a sort of collateral for the money that they spend on you. However, they cannot put a lien on your property if the previous exclusions listed apply. Additional exclusion for a lien is if someone else has equity in your home. 

Protecting your assets in the event of your death is another complicated circumstance in which an attorney can be of great assistance. Laws will vary between states and an attorney will have extensive, helpful knowledge about your options. They may advise you to:

  • Create an irrevocable trust (which is a specific type of trust that you cannot change) to keep your assets protected in the event of your death 
  • Create a hardship waiver that asserts if Medicaid were to make an estate claim, it would cause undue hardship to survive family members

At The End of The Day

Your health and wellbeing should remain the number one priority when it comes to managing inheritances and Medicaid eligibility. Plan ahead for your own peace of mind, and seek help when necessary. 

Jessica FoxJessica Fox has been a freelance writer for five years, with a specialty in health, wellness, and insurance. During this time, she’s written for some of the biggest B2B and B2C brands from around the world. Jessica is also the mother of two young daughters and loves coffee, writing, and working out.