Elder law attorney Harry Margolis emphasizes that naming beneficiaries on bank and investment accounts does not safeguard those assets from Medicaid’s regulations. In a recent discussion, Margolis clarified two critical concepts: Medicaid eligibility and estate recovery. To qualify for Medicaid, applicants usually need to reduce their countable assets to around $2,000, excluding most assets aside from a primary residence. Therefore, simply adding beneficiaries to accounts does not change asset ownership; these remain countable until spent down, a step required for Medicaid eligibility in most states.
Estate recovery comes into play after a Medicaid recipient’s death, wherein states seek reimbursement from the deceased’s estate for costs incurred during care. This recovery predominantly targets homes, as they are often the only substantial assets a recipient retains while enrolled in Medicaid.
Spouses of nursing home residents may keep a portion of the family assets, as states allow them to retain a slightly higher amount. Notably, only the Medicaid recipient’s estate is subject to recovery, leaving a spouse’s estate unaffected. The specifics of estate recovery can vary significantly by state, with some states limiting recovery to probate property while others include non-probate assets.
Margolis also highlighted the implications of the five-year look-back rule, which affects asset transfers and could create periods of ineligibility for Medicaid. Many people prioritize protecting their homes over liquid assets, often seeking legal advice to navigate the complexities of Medicaid planning effectively.
Why this story matters:
- Clarifies misconceptions regarding Medicaid and asset protection.
Key takeaway:
- Naming beneficiaries on accounts does not protect assets from Medicaid requirements.
Opposing viewpoint:
- Some may argue that beneficiary designations offer a level of protection against probate, despite Medicaid’s rules.
