Can Medicaid Take My Mother’s Settlement Money From a Lawsuit Against the Nursing Home?

Question: My mother went into a nursing home six years ago after she broke her hip. She receives Medicaid benefits. We intended for her to get therapy and return home, but while she was in the nursing home, she was severely injured in a fall and now cannot leave the nursing home. She sued the nursing home and received a little more than $25,000 in a settlement. Now Medicaid wants the money that was awarded to her to pay for her care. How can this happen? It should be illegal. Medicaid should make the nursing home be responsible for their neglect and my mother’s health from now forward. Is there any way for my mother to keep this money to be used for her final expenses?

Answer: This is a problem when a nursing home resident who is covered by Medicaid, as most nursing home residents are, files a lawsuit against a nursing facility. In order to get Medicaid coverage, nursing home residents must spend down all of their money. If they receive money from any source, including a lawsuit, it must then be spent down. This is something the law firm should have discussed with your family before bringing the lawsuit. Some states allow transfers to a pooled disability trust, which would permit the funds to be used for your mother’s benefit. Any funds left in the trust at your mother’s death would have to be paid to the state. To see if this avenue is available where your mother lives, contact a pooled trust in your state. Here’s a directory of pooled trusts: http://specialneedsanswers.com/pooled-trust.