The life insurance policy is for the amount of 60,000. My deceased sister left her this money through her life insurance policy. I don't want it to affect my mother's Medicaid. So I don't know if it would be wise to forfeit the claim and let it go to the other beneficiaries or claim it and see what options she may have that will not affect her Medicaid and SSI benefits, if there are any? She left her this money so that she could be taken care of, but unfortunately it is causing more harm than help. Please advise as to what options there are available.
FYI: She resides with me full time in the state of Florida I am also one of her POA as well as my other sister.
My will goes into a trust for the designated beneficiaries that is set up for care of my wife. Upon her death the trust will be covered by our wills and go to the heirs.
See and discuss this with a qualified elder affairs attorney. Never rely of posted advice.
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Thus, it would be better for her to accept the money and immediately convert it to something not countable, e.g., a Medicaid annuity, prepaid funeral and burial, household items, new car, etc. I give a lot of these suggestions in my Medicaid Secrets book (by the way, the 2015 edition is just out. www.MedicaidSecrets.com).
However in Florida, if countable assets are disposed of in manner that does not impose a Medicaid eligibility penalty in the same month they are received, it is quite possible that no penalty will ensue.
Otherwise, for each month your mother is over the asset limit of $2,000, she will not be eligible for benefits.
In addition to the other suggestions provided, there may be other options to preserve the proceeds for your mother's benefit while she is receiving Medicaid.
Consider a Personal Service Contract between you and she. The value of the contract can be paid in lump sum to you without penalty (may be a taxable event).
Also consider using a Supplemental Needs Pooled Trust. Transferring funds to this existing irrevocable trust sponsored by 501c3 organizations allow her to maintain Medicaid eligibility while having access to the funds transferred for almost anything related to her health, maintenance, and welfare while receiving benefits.
Does she own a home with a mortgage that can be paid down?
I encourage you to explore all the options available to preserve the cash for her use while she is receiving Medicaid benefits.
Thanks for any assistance with this question.
I, too, am paying down my mother's money for her care. It's not my money, it's her money.
Taxpayers should not have to foot the entire bill for our elders, especially if people have money to pay for their medical care. I'd suggest you spend it down on your mother (it's her money).
I hired a Medicaid consultant along with an Elder Care Attorney. I am thankful Medicaid is available to help me and my mother. Think about what would happen if it weren't available.
I've also kept up her Medicare and BC/BS to help her get the best care she can while in the facility.
I am glad to hear you explored options to preserve the life insurance proceeds for your mother's benefit while she is receiving Medicaid benefits.
Since you already sought the advice of counsel (I would never recommend one NOT seek legal advice if they felt it in their best interest to do so) I will tell you that you do not need a lawyer to participate in a Supplemental Needs Pooled Trust (SNT).
As you have discovered, this is an existing trust arrangement already established by a 501c3 non-profit specifically for Medicaid beneficiaries who are over the resource limit. As such, a new document is not being drawn; your mother (or you as POA if she does not have capacity) will be signing a joinder agreement which is a pretty straightforward document. The trustee will explain the circumstances and procedures for distributions for mom's needs and what happens at mom's demise. If at anytime you feel uncomfortable you can always halt the process and seek counsel.
Another consideration is notifying Medicaid of the change in financial circumstances. Will the attorney do this as part of the fee in question or are you comfortable doing that yourself?
Money from the trust can be used to pay mom's attorney AFTER it is placed in the trust. Technically, the funds could be used to pay the attorney before being placed in the trust as well but you might get some push-back from Medicaid and it is not worth taking the risk.
As mentioned a moment ago, you will make requests for distributions from the trustee. Usually bills are paid and then submitted for reimbursement. Some organizations will allow a "purchase order" to be submitted for an advance distribution towards a purchase and recurring expenses can often be set-up to be paid by the trust automatically. Most trustees pay bills every two weeks.
The downside to the SNT (some would say) is that it is a Medicaid "pay-back" trust in that any funds remaining in the trust at your mother's demise will first be used to either pay Medicaid back for cost of services delivered up to the cost of those services before any residual is distributed to heirs. (Alternatively, the non-profit organization can be the beneficiary of the amount due Medicaid).
If there is no money left in the SNT at mom's demise, then Medicaid will receive nothing back.
Some look at this as a negative but I look at it as good public policy. As noted by other posters, Medicaid is a taxpayer funded program for the needy - not a bank for those who have assets.
Alternatives? Both Mr. Heiser and I made other suggestions earlier. It is possible to use more than one alternative simultaneously.