Dad Gets German Reparations Money – Can Mom Keep it All?

Jerry’s dad receives a monthly check from the German government, compensation as a result of his suffering at the hands of the Nazis in World War II.   Dad has dementia and will soon need nursing home care.  Jerry is trying to preserve as much as he can for his mom, who is 10 years younger than Dad and still in pretty good health.  His question to me was, “is the German reparations money countable for Medicaid purposes”?

 An interesting question, and one that could have a real impact on Mom’s financial well being.  That’s because, under community spouse resource allowance rules, Mom will be able to keep a maximum of $110,000 but has to spend down the balance of their $200,000 in assets before Medicaid will cover Dad’s care.  That’s not much to live on, especially if Mom lives another 10 years or more.

 Medicaid does exempt the German reparations money from income rules, meaning it isn’t counted as income for purposes of determining eligibility.  But, Dad has received over $200,000 from Germany over the course of his lifetime.  Can that money be treated as an exempt or non-countable asset under Medicaid rules?  If so, then Mom can keep the extra $200,000, which would go a long way towards easing her money worries.

 The problem for most recipients is that it isn’t easy to identify which assets are from the German pension because the reparations money wasn’t segregated.  After all, the average person isn’t thinking about needing Medicaid years into the future, nor does he/she know the intricacies and specifics of the Medicaid regulations.  And there isn’t a specific regulation in New Jersey that talks about German reparations anyway, just a federal regulation.  (The Medicaid program is governed by a hybrid of federal and state regulations.)

 What I did tell Jerry, however, is that if the money can be segregated and traced, there is a very good chance that the entire amount can be exempted.  That means we must document how much Dad received over his life, place that dollar amount in a separate account and when we apply for Medicaid explain that this is the “German reparations” account.   It might require some negotiation with the State but it is well worth the effort.  Mom was relieved when I told her this and we have begun to take steps to make it all happen.  Stay tuned.