Will My Inheritance Affect My Husband's Nursing Home Care?

Medicaid pays for long-term care for those who are in need. Additionally, when someone applies for Medicaid to pay for nursing home care, the government looks at their financial history to ensure they meet strict asset limitations. Medicaid verifies that no assets have been gifted during the lookback period.

In every state except California, the lookback period is five years (60 months).

• When your husband applies for Medicaid, the agency reviews all asset transfers made in the five years prior.
• If they find assets were given away or transferred for less than fair market value during those five years, your husband may be hit with a penalty period — a length of time where he is ineligible for Medicaid coverage, meaning you would have to pay for the nursing home out-of-pocket.

Does Your Inheritance Count?

Because your husband is on Supplemental Security Income (SSI), he is currently subject to very strict asset limits (usually $2,000 for an individual or $3,000 for a couple). SSI also has a three year lookback period.

Thus, if you inherit money directly, or if the money is considered a joint asset, it could:

1. disqualify him from his monthly SSI checks
    
2. make him ineligible for Medicaid nursing home care until that money is “spent down” on his care

Additionally, if the inheritance is given away, then it will negatively affect both SSI and Medicaid eligibility.

Ways to Protect the Inheritance

There are legal strategies to keep an inheritance from being “taken” or used up by nursing home costs. However, these usually require action before the money hits your bank account or well before your husband needs care.

1. Third-Party Special Needs Trust (SNT)

This is often the best solution. Instead of your parents leaving money to you outright, they can set up a third-party SNT.

• The money stays in the trust for your benefit, but because you don’t “own” the money, it doesn’t count toward the asset limits for SSI or Medicaid.
• Unlike some other trusts, a third-party SNT does not require a payback provision to the state.

2. Post-Inheritance: A Sole Benefit Trust

If you have already inherited the money and your husband needs care, you might be able to transfer the funds into a trust specifically for his sole benefit. However, while the transfer is permitted, it does not eliminate Medicaid’s spousal limits on assets if the inheritance is too large.

3. Modernizing Your Parents’ Will

Since your parents are still living, ask them to speak with an elder law attorney. They can add discretionary trust language to their will. If the money goes into a trust rather than a direct inheritance, it is much harder for the state to claim it for nursing home costs.

Protecting Assets