Impact of Overseas Assets on Medicaid applications
FALSE – Individuals seeking Medicaid eligibility for long term care supports and services must disclose all assets they own both in this country and anywhere in the world.
In our last post our elderly gentleman thought there was no need to disclose overseas assets when applying for institutional level of care Medicaid. The program he is applying for is the Aged, Blind, and Disabled (ABD) Medicaid program under which falls the Managed Long Term Services and Supports (MLTSS) program. In our earlier posts, we had noted that in order to qualify, there is an asset limit of a mere $2000 and even $1 in excess of this limit in any particular month could jeopardize eligibility.
In this article, we want to emphasize an applicant’s reporting requirements. Countable assets include all “available” assets, no matter where they are located. Oftentimes applicants, either innocently or intentionally, fail to report their assets located overseas. This can cause unintended adverse consequences either with an immediate rejection of the application should the agency uncover the existence before approval or with Medicaid recovery post death. In the latter situation, a loved one suddenly discovers a collection notice from the recovery department usually asking to satisfy a significant amount which would need to be paid back to the state by a certain date. This amount represents the lien that had accrued over years of receiving Medicaid during the recipient’s lifetime. Worse yet, if the assets were never disclosed to the IRS, now there is an additional burden of proving the source of funds when it ends up in the hands of a US beneficiary.
Primary residences – one asset considered “unavailable” or “exempt” during lifetime is the primary residence of the applicant, who may have still have this in his or her name before moving to the US. While this is exempt during lifetime (especially if there are mitigating circumstances restricting sale at the time of the application) but recoverable upon death. Post death, the agency stands in the same priority as the State of NJ or the IRS (with respect to income or death taxes) and repayment must be made from the proceeds of the sale. Otherwise the Executor/Administrator may be held personally liable for distributing any assets to the beneficiaries.
PRACTICAL TIP – While disclosure is always the best way to deal with overseas assets, it is also important to keep in mind that in some developing countries, it may not always be possible to obtain fair market values of property especially those located in remote villages or rural areas. In these places, even assessed values that are typically maintained by the tax office are hard to get because these offices are not technologically efficient and may still rely on antiquated paper logs.
If you or your loved ones own overseas assets and US is now your new home, then it is important to sit down with an elder law attorney to discuss these issues and develop a comprehensive estate plan that factors in the a future possibility of applying for Medicaid and possible steps you can take now with your overseas assets to avoid any surprises in the future.