Inadvertent Disqualification of Individual Due to Death of Another

Inadvertent Disqualification of Individual Due to Death of Another

As indicated in Post No. 4, a Medicaid recipient’s resources on the first of any month after Medicaid must not exceed the resource limitation of $2,000 or $4,000.

The prior death of a relative of a Medicaid recipient could result in the loss of eligibility. The estate plans of individuals of a Medicaid recipient are often a neglected consideration. Such concerns can even arise when an individual has been part of the Medicaid planning process, such as a “protected transferee,” a disabled child or a donee of gifts.

For example, if the home is transferred to an exempt individual, major concern is that the will of the transferee not devise the home to the potential Medicaid recipient or that the potential Medicaid recipient not receive a share of the estate of the transferee by intestacy.

It is important that a Medicaid recipient not be a beneficiary under any will. Therefore, the wills of other relatives, whether or not a participant in the Medicaid planning process, should be reviewed. Generally, ethical considerations will dictate that such individuals retain separate counsel.

Inheritance by intestacy could also result in disqualification, see N.J.S.A. 3B:5-3, 4.

The receipt of nonprobate assets such as insurance proceeds or retirement benefits could also cause disqualification.

With respect to life insurance, if an owner designates a primary beneficiary without contingent beneficiaries, the policy could provide that the insurance would go to the Medicaid recipient. Therefore, beneficiary designations should be carefully reviewed.

The topic of the will of the “healthy spouse” is complicated and has been purposely neglected. Reference is made to my article Practical Medicaid Planning – Part II, 1999 “Estate Planning Issues,” by Levin, Mark.



Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© April 2009, Post #21