Can Unclaimed Money Be Transferred Without Affecting Medicaid?

Question from Heather, Can Unclaimed Money Be Transferred Without Affecting Medicaid?

Answer from AI:

When dealing with unclaimed money, especially from a settlement or inheritance, and concerns about Medicaid eligibility, it’s important to understand how these funds can impact Medicaid benefits and what legal options might exist for managing the funds. Medicaid is a need-based program, and receiving a lump sum of money can indeed affect eligibility.

Understanding Medicaid Eligibility

Medicaid eligibility is determined based on income and assets. Receiving a significant amount of money could disqualify an individual from receiving Medicaid benefits because it might push their assets above the allowable limit. Here are some general points to consider:

• Asset Limits: Most states have an asset threshold that must not be exceeded for an individual to qualify for Medicaid. This typically includes cash, bank account balances, and other liquid assets.
• Income: Regular income, as well as one-time payments like inheritances or settlements, are considered in determining Medicaid eligibility.

Options for Managing the Settlement Money

If your mother is concerned about losing Medicaid eligibility due to claiming the settlement money, there are a few strategies that might be considered. However, each of these requires careful legal consideration and the advice of a qualified attorney:

1. Special Needs Trust: This type of trust can be set up to benefit someone who receives government benefits like Medicaid. The funds in the trust are managed by a trustee and can be used to pay for expenses that Medicaid does not cover. This does not count as an asset in Medicaid eligibility determinations.
2. Spend Down: Spending down refers to using excess assets on non-countable or exempt assets or services that Medicaid does not cover. This could include medical expenses, personal care items, home modifications for disability access, and more.
3. Gifting: While gifting money can sometimes be a solution, it is fraught with risks in the context of Medicaid. Medicaid has a look-back period (typically five years) during which any gifts or transfers can be scrutinized. Transfers during this period could result in penalties or disqualification periods.

Legal Considerations and Next Steps

Given the complexities and potential consequences of transferring or managing large sums of money with respect to Medicaid eligibility, it is crucial to consult with a legal professional who specializes in elder law or Medicaid planning. They can provide guidance tailored to your mother’s specific situation and jurisdiction. Here are some steps you might consider:

• Consult with an elder law attorney who understands both the regulations in Texas (where the settlement originates) and Georgia (where your mother resides).
• Discuss the possibility and implications of setting up a Special Needs Trust or other legal structures.
• Review the full details of the settlement and any conditions attached to the money.

It’s important not to transfer any money or make financial decisions that could impact Medicaid eligibility without professional advice. Each state has different rules and thresholds, and what might be a viable option in one state could be problematic in another. Always ensure that any actions taken are fully compliant with state and federal laws to avoid unintended consequences.