My mom have to spend her inheritance money on personal items only?

A fellow caregiver asked...

My mother (Ohio) just received an inheritance of 50k they are going to stop her medicaid which i already knew. but my question is : Does she have to spend it on personal items only ? what about the 11k she may be allowed to give me & my brother is this considered as a spend down? A Car ? Land ? House & land ? Are these all considered spend down to qualify for medicaid spend down?

Expert Answer

What your mother can spend her money on under Medicaid rules depends on which Medicaid program she's getting coverage from. Medicaid covers regular medical care but there is also Medicaid coverage of long-term nursing home care. The spending rules are different for each.

If your mother is living at home and receiving Medicaid medical care coverage, the spending rules are quite loose. She can pretty much spend the money on anything, or even give it away, as long as she actually gives up use or control over or access to the money. In other words, she can't give the money to you and then have you pay her bills with it. Otherwise, once the money is gone from her control, it is no longer counted by Medicaid as her asset. However, if she uses the money to buy something tangible that she winds up keeping, it could continue to be counted as an asset and affect her Medicaid eligibility, depending on what it is. For example, she can buy a car (if it's the only one she has), and the value of the car will not be considered a "countable" asset by Medicaid if the value of the car is not greater than her state's Medicaid car exemption amount (the amount varies from state to state -- you'll have to check the rules of her state Medicaid program to find out what the figure is). Similarly, she could invest the money in a house and the value of the house would be an exempt (not counted) asset under Medicaid eligibility rules, but only if it's a house she actually lives in. If she uses the money to buy a house or land that she keeps an ownership interest in but does not live in, Medicaid will count that as an asset and might continue to disqualify her from medical care coverage.

Under Medicaid nursing home rules, the spend down rules are tougher. Basically, the rule is that within the five years prior to applying for Medicaid nursing home coverage, she can spend the money on anything she wants but cannot give the money away and cannot buy things for more than fair market value -- such as hiring you to help her around the house and paying you $100 an hour for it -- or else she might have her Medicaid nursing home coverage delayed. The same rules as under Medicaid medical coverage (above) apply with regard to buying a house or land or car. If she does buy a house and later goes into a nursing home paid for by Medicaid, under most circumstances Medicaid will have the right to place a lien on the house to be repaid, but only after she dies, whatever it spends on her care.