Inheritance Disclaimer and Medicaid

There was a question from a reader regarding whether a medicaid recipient can disclaim his inheritance. In this situation, a 89 year old man has been in a nursing home for 3 years and for the last 2 years he has been on medicaid. He had very little assets and once those resources were depleted he applied for and obtained medicaid to cover his stay in a nursing home. Now a relative has died and in their will left the 89 year old an interest in a home which when sold will yield him about $125,000. He prefers to disclaim this inheritance to enable a younger relative to inherit. Can he do this?

In order to answer that question, you must review the federal medicaid law and the state law interpreting and implementing that law. Unearned income is consider a resource for medicaid purposes and an inheritance is unearned income. But, if you disclaim an inheritance you never get this unearned income. However, does this disclaimer amount to a transfer of assets which brings with it a penalty for eligibility? Does medicaid have to be informed regarding the inheritance and the disclaimer? If the 89 year old should proceed to disclaim, there will be potential objections from medicaid and who would win depends upon all the factors mentioned.

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