Understanding the Problem
Supplemental Security Income and many North Carolina Medicaid categories use strict income and asset tests. A lump-sum inheritance may therefore affect benefits when it is received and continue to affect them if the money remains in a bank account or another countable form.
Apply the Law
Key Requirements
For SSI, an inheritance is generally treated as unearned income in the month it is received. It can reduce or stop SSI for that month, and any funds retained into the following month generally become a resource. The SSI resource limit is generally $2,000 for an individual and $3,000 for a couple, so benefits can stop while countable resources remain above the applicable limit.
Medicaid resource rules depend on the recipient’s eligibility category. North Carolina expressly includes SSI beneficiaries among the populations covered by Medicaid, but a person who loses SSI may still qualify under another Medicaid category if that category’s separate requirements are met.
What the Statutes Say
N.C. Gen. Stat. § 108A-54 authorizes North Carolina’s Medicaid program and provides that the General Assembly determines eligibility categories, resource limits, and income thresholds. N.C. Gen. Stat. § 108A-54.3A(a)(14) identifies beneficiaries receiving SSI as a covered Medicaid population.
North Carolina also recognizes special-needs trusts designed not to be treated as resources for governmental-benefit eligibility. N.C. Gen. Stat. § 36C-8B-13 addresses qualifying pooled trusts and trusts containing Medicaid payback provisions.
Analysis
Process & Timing
Because both programs may be affected by a single inheritance, act promptly. Report the inheritance as required, determine what portion will remain after the month of receipt, and review how the funds are held or used. Depending on the applicable rules, options may include paying permitted expenses, purchasing excluded assets, or placing funds in a properly structured first-party disability trust or pooled trust.
Common countable resources include cash, bank accounts, and investments. Potentially excluded assets may include a principal residence, one vehicle, personal effects, and burial arrangements, subject to the requirements and limitations of the applicable benefit program.
Exceptions & Pitfalls
Do not give away or transfer inherited assets without first reviewing the benefit consequences. Under N.C. Gen. Stat. § 108A-58.1, transferring assets for less than fair market value can create a period of ineligibility for specified Medicaid long-term-care, home-health, personal-care, and waiver services, although statutory exceptions and hardship relief may apply.
Failing to address excess resources can leave you without benefits for months. A trust must also satisfy all applicable requirements; simply moving money into an ordinary trust does not necessarily protect SSI or Medicaid eligibility.
Conclusion
An inheritance can reduce SSI in the month received and, if retained, can make resources exceed SSI limits in later months; losing SSI may also affect North Carolina Medicaid tied to SSI status. The key threshold is whether the inheritance, together with other countable resources, exceeds the limit for the person’s specific benefit category. Before accepting, transferring, or spending the funds, report the change and have counsel evaluate permitted spend-downs, excluded assets, and any properly structured trust.
Talk to a Probate Attorney
If you expect an inheritance or have already received one, contact Pierce Law Group for a free case evaluation by emailing [email protected] or calling (919) 341-7055.
