Dad Gets Knocked Off of Medicaid (Part 2)

                Last week I was telling you about John’s dad who was about to be knocked off of Medicaid.  His mom had recently died.  Her will stated that should Dad survive Mom her estate would pass to him.  Included in the estate was the marital home which she was able to keep as an exempt asset when he applied for Medicaid.  That’s because she continued to make it her home.  The company John hired to file the Medicaid application advised them to remove Dad’s name from the deed.

                So why was he now about to lose Medicaid?  Because he was about to receive the home under her will.  Since he is in a nursing home and not living in the marital home it is now a countable asset for him.  The State of New Jersey gave him 2 very unappealing options.

                Option 1 is to sell the home and turn over all the proceeds to the state and remain on Medicaid.  If, however, Dad dies and it turns out that the amount in Medicaid benefits he received is less than the money John turned over, there will be no refund.  The state gets to keep it all.

                Option 2 is to terminate Medicaid benefits and keep the proceeds.  However, John will have to private pay for his dad’s nursing home care at a rate that is almost double the Medicaid rate.  If he lives long enough to spend down the entire amount then he can reapply for Medicaid.

                The shame is that it didn’t have to turn out this way.  John missed an opportunity.  The company that handled his dad’s Medicaid application failed to tell him that his mother should change her will so as not to leave her estate to his dad, but instead to John and his brother.

                She still must leave the minimum to satisfy New Jersey’s elective share to Dad.  That’s because New Jersey law says a surviving spouse cannot be completely cut out of the will unless he/she consents to it.  Medicaid uses that law to say that Dad would have at least been entitled to the elective share amount which is 1/3.  Still, John would have been able to protect the other 2/3.  An opportunity lost for John but hopefully one others can learn from.