How Not to Lose Medicaid (Part 4)

In last week’s post, I explained that when a Medicaid recipient’s spouse dies the estate administration process can take time to complete.  This process impacts the Medicaid spouse because – like it or not – that spouse must receive a minimum amount of assets under New Jersey’s elective share.

Obviously, this could potentially impact Medicaid eligibility since it doesn’t take much to exceed Medicaid’s $2000 asset limit.  How exactly?  Well, that depends on the type and amount of assets.  

As I wrote last week, if the deceased spouse owned assets that are considered inaccessible as defined by Medicaid regulations – such as real estate owned with another person who refuses to sell – these assets would not count towards the asset limit and would not cause a loss of benefits.  

The primary residence of the deceased spouse might also be good asset to use to satisfy the elective share if there is another family member who has been living there.  The home would not need to be sold until that family member moves out.

If there are, however, assets that must be given to the Medicaid spouse that clearly are countable, a decision needs to be made whether to give those assets to the State and remain on Medicaid.  Alternatively, the spouse can keep the assets and terminate Medicaid benefits, in which case the spouse must spend down those assets before reapplying.

Which is the best option depends on the facts of each particular situation.  This is where Medicaid’s estate recovery laws enter the conversation.  Although the State’s right to collect under estate recovery doesn’t happen until after death, it helps to estimate what that amount may be.  

We’ll cover that in more detail next week.