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Tax Refund Pushes Medicaid Recipient Above the Program's Asset Limit

  • August 1st, 2014
Q
My father-in-law is in a nursing home and is receiving Medicaid benefits. When we had his taxes done this year, he had a refund of $3,000. I know he cannot have more that $2,000 in his account and remain eligible for Medicaid. What do we do at this point? 
A

In this kind of situation, we advise clients to spend down the money over $2,000 before the end of the calendar month in which the funds are received. For instance, if the money arrives on June 13th, it must be spent down by June 30th. Then, we inform the state Medicaid agency in writing about everything that happened, sending the letter by certified mail. Technically, the funds your father-in-law received were income that should be paid towards his care, but in practice our state’s Medicaid agency has never asked for the payment. We recommend that you check with your state Medicaid agency or a local elder law attorney to make sure this practice works in your state.

For more on how Medicaid treats income, click here.

Local Elder Law Attorneys in Ashburn, VA

William Fralin

The Estate Planning & Elder Law Firm PC
Bethesda, MD

Ron Landsman

Ron M. Landsman, P.A.
Rockville, MD

Loretta Williams

Hale Ball Carlson Baumgartner Murphy PLC
Fairfax, VA


Last Modified: 08/01/2014

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