Understanding Medicaid: How to Maintain Medicaid Benefits After the Loss of a Spouse

If you are receiving Medicaid benefits and your spouse passes away, you may find yourself at risk of losing your benefits. Under most state’s law, a widow or widower has the option to receive what is known as an “elective share” of their deceased spouse’s estate. Whether the surviving spouse elects to receive this share or not, the situation poses unique risks to their continued ability to receive Medicaid.  Luckily, there are steps you can take to help mitigate this problem, but because of the complex nature of the arrangement, only an experienced estate planning attorney can successfully ensure that you can retain your Medicaid eligibility.

What is an Elective Share?

An “elective share” is a legal term that refers to the right of a widow or widower to receive a certain percentage of their deceased spouse’s estate, regardless of what is written in the deceased’s Will and in some cases even a person’s trust agreement.  For example, in Missouri, this share can constitute 1/2 of the deceased spouse’s estate.  Among the assets that can be considered part of the elective estate are:

•    The deceased’s probate estate

•    Their revocable trusts

•    Their ownership interest in accounts or securities that are payable or transferable on death

•    The value of death benefits received under a pension or the value of a retirement account

Medicaid and the Elective Share

Whether the widow or widower chooses to receive the elective share can be irrelevant and could put their Medicaid benefits at risk.  If a surviving spouse chooses not to receive the share, the Medicaid program may still consider that a “gift” has been made and the surviving spouse may be disqualified from receiving Medicaid benefits for a long period of time.  If the surviving spouse does accept the share, then they will likely be over the Medicaid asset limit.  As a result, they will be ineligible to receive further Medicaid benefits until they have spent their funds down to $5,000 or less.

How to Retain Medicaid Benefits

While it might seem like you can’t win when it comes to retaining Medicaid benefits, there are a few legal solutions.  Depending on the state, an individual may be able to create a special type of restrictive trust when they initially draw up their estate plan. In this way, if they should pass on, the elective share may be satisfied by this special trust and the money will not need to be spent down before becoming eligible for Medicaid benefits.  In other situations, a special type of annuity may be used in order to mitigate the spend down requirements. 

The Importance of an Estate Planning Lawyer

Determining which method is right for you and your family should be discussed early on with your estate planning attorney.  The creation of this type of special trust is a complicated procedure that requires careful wording.  If any part of the document is not drawn up properly, you can risk losing your Medicaid benefits. Hiring an experienced lawyer who is well versed in your state’s estate and asset protection law is the best way to ensure that your spouse is protected should you pass on.  Remember, a strategy that works in Missouri, may not work in Kansas, Arkansas, or Oklahoma.

Contact The Law Firm of Christopher W. Dumm

At the Law Firm of Christopher W. Dumm, we have many years of experience helping our clients protect their assets and ensure their family’s well-being. When you need an expert estate planning attorney, give us a call at 417-623-2062 or fill out the contact form below.