Elder law clients many times have issues maintaining the SSI eligibility after an inheritance or personal injury settlement.
In order to determine eligibility for SSI, SSA must determine the value of an individual's resources at the first moment of the month. Transferring ownership of a resource may affect the value of an individual's countable resources which in turn can affect SSI eligibility. As of 12/14/99, transferring ownership of a resource for less than fair market value can result in a period of ineligibility for SSI.
SSI rules penalize individuals for transferring resources for a period of time up to a maximum of 36 months. SSI rules do not penalize individuals for transferring income.
When an individual receives a lump sum inheritance for example, that money is considered income in the month in which it is received and a resource in the month after receipt. Despite this rule, a transfer of income in the month it is received is considered a transfer of a resource if the income would have been considered a resource in the following month. Although, under the first of the month rule, receipt of income would not be counted toward the beneficiary's SSI resource limit until the month after it is received, such income meets the regulatory definition of a resource the month it is received. Resources include cash or any other property that an individual owns and could convert to cash to be used for his or her support and maintenance.
Example: Mr. Smith receives an inheritance of $5,000 in May, 2015. In the same month, he transfers the $5,000 to his brother. The $5,000 inheritance is counted as unearned income in May. It is also considered to be a transfer of a resource in May. Despite the fact that the inheritance would not be counted as a resource unless retained until June, we consider the transfer subject to the transfer of resource penalty because it meets the definition of a resource in the month of receipt.
It is imperative that proper counsel be obtained by elder law clients in planning for inheritances and personal injury settlements to minimize the loss of benefits for both Medicaid and SSI. Contact our offices to schedule an appointment if you face such issues.