Florida Elder Law & Estate Planning Blog

How To Keep Medicaid Benefits Flowing to a Nursing Home Resident If The Well Spouse Dies First

It is a common assumption that an incapacitated person receiving long-term nursing care will pass away before his/her well spouse does. However, statistics show that is not necessarily the case, particularly when you consider that many “well” spouses are left psychologically exhausted and physically diminished after years of caring for an ailing partner. If the spouse in a nursing home is receiving Florida Medicaid benefits, assuming that he/she will die first can be financially disastrous.


Limit on Medicaid Recipient’s Assets

For most people, receiving an inheritance is a welcome event. But if your spouse is in a nursing home and receiving Medicaid benefits, an inheritance from your estate could create a big problem. Here’s why: Under Florida law, a Medicaid recipient cannot have more than $2,000 in assets. If the Medicaid recipient receives an inheritance from a deceased spouse (or from anyone else, for that matter) and the inheritance pushes his/her asset level above $2,000, Medicaid benefits will terminate.


What Can Be Done If the Nursing Home Spouse Receives An Inheritance?

Spend down. You may pay the nursing home; pay for an irrevocable funeral contract; or enter into a personal services contract with a relative who will assist the Medicaid recipient. You may think of other options, but not all options are wise or effective. A qualified and experienced elder law attorney should always be consulted on the best strategies for spending down.


Two Approaches That Do NOT Solve The Problem

You may be thinking, I just won’t leave anything to my spouse who is in a nursing home and getting Medicaid benefits. That sounds like a logical approach, but it won’t solve the problem. Florida’s elective share law says that a person is entitled to 30% of his/her deceased spouse’s estate, regardless of what the dececent’s will or trust says.

Disclaiming the inheritance won’t solve the problem, either. An estate beneficiary has the right to refuse an inheritance, of course. But in the case of a nursing home resident getting Medicaid benefits, disclaiming an inheritance comes with penalties. Under the Federal Omnibus Reconciliation Act of 1993, the disclaimed amount is considered to be funds received by the Medicaid recipient. Disclaiming the inheritance will create a period of ineligibility for benefits, the duration of which is based on the amount disclaimed.


The Solution: Make Plans To Avoid The Problem

The best solution is to make sure an inheritance from the deceased spouse’s estate never goes directly to the Medicaid recipient. To accomplish this, you should consult an elder law/estate planning attorney who will analyze the well spouse’s estate plan. Our attorneys usually recommend that the well spouse leave the amount of the elective share in a Special Needs Trust that benefits the nursing home spouse. Under Florida law, it must be a testamentary special needs trust- in other words, created within the Last Will & Testament of the deceased spouse.


The assets of the Special Needs Trust are deemed unavailable to the Medicaid recipient, and the funds must be used to supplement Medicaid, not to supplant it. For example, funds from the trust may be used to provide the nursing home spouse with a private room, or with private aides. When the spouse on Medicaid passes away, any funds that remain in the trust will pass to the ultimate beneficiaries, without any Medicaid recovery.


The attorneys of The Karp Law Firm are experienced in Medicaid law and can help set up a Special Needs Trust for a Medicaid recipient, as well as guide families who are seeking Medicaid benefits for a loved one. Contact us at (561) 625-1100 for a consultation.