The Intersection of Medicaid and Probate

This column first appeared in the San Antonio Express News on December 11, 2015. 

Dear Mr. Premack: 2015-12-11My father and my mother separated, but did not divorce, when mother moved in with my sister in San Antonio in 1999. My father remained in their house on 5 acres about 150 miles away. In 2004 my mother was approved for Medicaid, which pays for her health problems. My father passed away in 2012. We are considering probating his Will (which leaves everything to my mother). She is concerned that MERP will come in and take away the 5 acres and house. The Will also states that if she can’t handle affairs, it would transfer to me. My questions are: 1) Once we file probate does my mother lose her Medicaid benefits? 2) Once the probate is done, can she get a Lady Bird Deed to transfer the property to her children? If a Lady Bird Deed is issued, does she still need to prepare an updated will? Her goal is to keep the property in the family. 3) Can she still see her doctors in San Antonio, if she lives in another town that lacks the specialty doctors she needs? – JA

You are asking questions that deal with the intersection between Medicaid and Probate. Medicaid is the government run program which provides nursing and home care to qualified patients. Probate is a courtroom process for transferring assets and satisfying obligations after a person dies. MERP is a program run by Medicaid which is designed to seek, after the patient dies, reimbursement for taxpayer dollars spend on that qualified Medicaid patient.

To qualify for Medicaid, your mother needed to have a certain low monthly income, and she and your father as a married couple needed to have assets valued below a certain amount. Note that she was approved for Medicaid despite the fact that she is part owner of a home on five acres. This is because Medicaid’s rules do not count the value of the homestead and acreage when determining the value of the couple’s assets.

The fact that your father has died, and that his Will leaves the house and acreage to her, does not change her financial picture in the eyes of Medicaid. He was not the Medicaid patient, so they cannot invoke MERP at this time. After the Will is probated she will own 100% of the house and acreage, but it remains her homestead and still does not count toward the value for Medicaid’s limits. So the answer to question 1 is that your mother will not lose her Medicaid due to probate of your father’s Will.

She will remain a Medicaid patient, but she will not live forever. Someday, when she dies, MERP will desire to make a claim for reimbursement of the taxpayer dollars spend on that patient against the house and acreage. However, their own rules specify that they can only make a claim when her Will is submitted for probate. Consequently, transfer of the house and acreage in another manner – one which avoids probate of her Will – is appropriate and legal. The most useful legal method to avoid MERP currently is to utilize a properly written Lady Bird Deed (often called an Enhanced Life Estate Deed).

The answer to question 2 is that once she has probated her husband’s Will and owns 100% of the property, she can have an experienced Elder Law Attorney write a Lady Bird Deed for her. The deed maintains the home and acreage as her homestead for the rest of her life but then passes title upon her death to those she names in the Deed. She still needs a well written updated Will to act as a safety net in case something goes wrong (like the death of one or more of the people she names in the Lady Bird Deed) and needs updated Durable Power of Attorney, Medical Power of Attorney and a Directive to Physicians.

Your final question is whether she can still see her San Antonio doctors after she moves 150 miles away. I don’t see any legal roadblocks. Generally, her doctor bills are paid partially by her, partially by insurance, and mostly by Medicare (not Medicaid). It would be up to the doctors to decide if they can provide quality services over that distance.

Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com.

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