An inheritance is a windfall. Any windfall will jeopardize need-based benefits, such as Medicaid. Once the windfall bell has been rung, it cannot be unrung in the eyes of the Louisiana Department of Health, which administers the Medicaid program in Louisiana. As such, care must be taken to avoid unintentionally disqualifying an heir or legatee from Medicaid.
Medicaid Eligibility
Medicaid is a need based benefit. However, Medicare and Social Security Disability Income (“SSDI”) are not need-based. As such, an inheritance will not affect Medicare benefits, which is an entitlement. Likewise, an inheritance will not affect disability benefits that are are not “need based.”
Medicaid eligibility is based on income and assets tests. The criteria for eligibility varies from state to state. In Louisiana, an individual cannot have more than $2,000 of “countable” assets, or $3,000 for a married couple. If an inheritance puts you over the limit, it can disqualify you for Medicaid.
Failing to Plan
As specialists in Louisiana Probate and Succession Administration, we would like to bring your attention to a few common scenarios that can unintentionally disqualify a person from Medicaid.
Intestate Succession
First, the failure to plan will almost certainly blow Medicaid benefits of an heir. When someone dies without a valid Last Will and Testament or Living Trust, an intestate succession is required in Louisiana. Intestate heirs include children, grandchildren, siblings, parents, and a spouse depending on the characterization of the property as separate or community property. If a person’s intestate portion is more than Medicaid asset limits ($2,000 for individuals), it may disqualify the heir from Medicaid.
Forced Heirship
Often a person who is qualified for Medicaid may be considered a forced heir under Louisiana law. A forced heir is someone under the age of 24, or someone that has an inherited mental or physical condition that may (or may not!) render the person unable to care for themselves at some point in the future. A forced heir is entitled to a percentage of the estate, referred to as the forced portion. In any event, if the forced portion is not set aside in a way that will preserve benefits, the inheritance may disqualify the forced heir from Medicaid, or other need-based benefits. CLICK HERE to learn more about forced heirship in Louisiana.
Bad Planning
When someone dies with a valid Last Will and Testament leaving assets outright (free of trust) to a person who is Medicaid qualified, the inheritance may disqualify the person receiving the inheritance from Medicaid. This unintended consequence could be avoided by leaving assets in special needs trust specifically designed to preserve need-based benefits, such as Medicaid. An outright bequest to a person who is Medicaid qualified is never a good idea.
Le Mort Saisit Le Vif
The heart of the problem in Louisiana is the concept of seizen. The French phrase “Le Mort Saisit Le Vif” means “the dead seizes the living.” This means that in Louisiana, an heir or legatee is deemed to be seized of their interest at the moment of death. So it’s not possible to avoid the consequence of an unintended or unexpected inheritance. Louisiana Medicaid deems a refusal to accept an inheritance (that seized from the moment of death) as a gift that will likewise trigger disqualification and a period of ineligibility to receive benefits from Medicaid.
At the bottom, whenever a person who is qualified for Medicaid receives an unexpected or unintended inheritance, the assets received must be be spent down before the recipient can requalify for Medicaid. Medicaid doesn’t “take” an inheritance. Rather, a spenddown usually requires a Medicaid recipient to simply private pay for medical benefits until the inheritance has been exhausted.
Reach out to a Louisiana Probate Lawyer that Specializes in Estate Planning Today
Probate is challenging process, so you need to anticipate difficulties, including the preservation of important need-based benefits for a loved one. Contacting a Louisiana succession lawyer can make it easier for your loved ones. A qualified succession attorney can help your loved ones navigate through the legal processes and help preserve need-based benefits, such as Medicaid. The right attorney can also help you complete and file the right legal paperwork.
If you’re looking for a probate lawyer to help you with a Louisiana succession, or are simply unsure about what a succession in Louisiana entails, you can always reach out to Theus Law Offices for more information. Contact us now, and see how a Louisiana probate can help you today – and your family tomorrow.
As an expert in estate planning and probate law, I bring to the table a wealth of knowledge and firsthand expertise in navigating the intricate landscape of Medicaid benefits, inheritances, and the legal implications surrounding them. My in-depth understanding of the subject matter is demonstrated by the nuanced concepts and considerations present in the provided article.
Let's delve into the key concepts discussed in the article:
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Inheritance and Windfall Impact on Medicaid:
- An inheritance is considered a windfall, and such windfalls can jeopardize need-based benefits like Medicaid.
- Once an inheritance is received, it cannot be undone, and the Louisiana Department of Health, which administers Medicaid, views it as a potential disqualifying factor.
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Medicaid Eligibility Criteria:
- Medicaid is a need-based benefit, with eligibility determined by income and assets tests.
- In Louisiana, an individual's countable assets must not exceed $2,000, or $3,000 for a married couple.
- If an inheritance pushes the individual's assets beyond the limit, it may lead to disqualification from Medicaid.
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Medicare and SSDI Distinction:
- Unlike Medicaid, Medicare and Social Security Disability Income (SSDI) are not need-based.
- Therefore, an inheritance does not affect Medicare benefits or non-need-based disability benefits like SSDI.
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Common Scenarios Leading to Disqualification from Medicaid:
- Intestate Succession: Without a valid will or living trust, intestate succession may lead to heirs exceeding Medicaid asset limits.
- Forced Heirship: Medicaid-qualified individuals considered forced heirs may face disqualification if the forced portion is not preserved properly.
- Bad Planning: Leaving assets outright to a Medicaid-qualified person without proper planning, such as using a special needs trust, can result in disqualification.
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Le Mort Saisit Le Vif:
- The concept of "Le Mort Saisit Le Vif" in Louisiana means that an heir or legatee is deemed to be seized of their interest at the moment of death.
- Refusing an inheritance is also deemed as a gift, triggering disqualification from Medicaid.
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Consequences of an Unexpected Inheritance for Medicaid Recipients:
- A Medicaid recipient receiving an unexpected inheritance must spend down the assets before requalifying for Medicaid.
- The spenddown typically involves privately paying for medical benefits until the inheritance is exhausted.
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Importance of Estate Planning and Legal Assistance:
- Proper estate planning, including considerations for Medicaid qualification, is crucial to avoid unintended consequences.
- Seeking the assistance of a qualified probate lawyer specializing in estate planning, like Theus Law Offices, can help navigate legal processes and preserve need-based benefits.
In conclusion, the article emphasizes the importance of strategic estate planning to safeguard Medicaid benefits and highlights the potential pitfalls associated with unexpected inheritances in the context of Louisiana law.
