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Receiving an Inheritance While on Medicaid

Trust & Estate Planning

Posted in on March 13, 2014

For most people, receiving an inheritance is something good, but not for a nursing home resident on Medicaid. Medicaid has strict income and resource limits, so an inheritance can cause a Medicaid recipient to be ineligible for benefits. At the present time a single individual is limited to $2,000.00 in countable assets and all income is payable to the nursing home.


An inheritance will be counted as income in the month it is received. Therefore, if you receive an inheritance and the amount puts you over the income limits, you will be ineligible for Medicaid benefits for at least that month. For example, if the resident receives an inheritance of $26,000.00 and the nursing home bill is $8,000.00 per month after utilizing income, the resident will private pay for three months totaling $24,000.00 and retain $2,000.00 as an asset allowance.

The first expenditure of the inheritance would be to pay the nursing home for the current month. After such expenditure, it must then be determined if there are any allowable expenditures that the resident can make that will not cause any further loss of benefits. A possibility is to purchase an Irrevocable pre-paid funeral contract.

These issues arise frequently when children want to benefit their parents in their estate plan. It is possible that at the time of drafting an estate plan, the parents are healthy but at the time of distribution such parent(s) are residents of a nursing home. Also, it must be noted that if an unmarried individual dies without a Last Will and Testament and is only survived by his or her parents then the laws of intestacy dictate that the parents are the heirs.

As always, it is advisable to discuss your options with an elder law attorney as to the proper way to attempt to protect a portion of the funds and how to benefit your parents in such a way that will not cause ineligibility for Medicaid benefits.