Medicaid Renewal

qualify her for Medicaid, and she has been enrolled in it for several years. In 2013 she inherited $100K in stock. Say she sells $20K of the stock in 2014 at a loss, and her tax return accurately reflects both a net capital loss and that her AGI is still low enough for her to continue to qualify for Medicaid. Would her Medicaid eligibility be affected by the "income" generated by the stock sale? In other words, do the Medicaid folks consider the $20K as current income even though there is a net loss, or do they look at the bigger picture of net capital gain/loss in determining income for eligibility purposes?

Medicaid eligibility rules vary between states. In California the moment that she inherited/took possesion of the stock she would have "excess" resouces to maintain her eligibility for MediCal (as we call Medicaid in California). She would be expected to spend down her resouces to about $3000 before becoming eligible to re-enroll in Medicaid.

There would definitely be penalties in terms of re-enrolling if she gave away the money but I think that she could piss away the money without penalty. She could safely buy a house without penalties.

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New York and California both agreed to the Obamacare Medicaid expansion. Assets are irrelevant. It's the Form 1040 bottom line income (MAGI) that determines eligibility. Capital gains and losses are relevant only to the extent they affect the latter bottom line. Google for {"Form 1040" Medicaid Obamacare income} for citations.

One caveat: Medicaid asset recovery is in effect in a number of states. For one, it applies to those age 55-64 (so pre-Medicare). Post-death, these states can and will seek reimbursement from the deceased's client's assets. Google for {estate asset recovery Medicaid Obamacare} for citations.

Lots with not-fully-disabled relatives are dealing with this. Even for those not-fully-disabled, working, and either above the income threshold for Medicaid or not in a state that expanded to Obamacare Medicaid, good health insurance is now just plain cheap.

Correction: It's modified adjusted gross income that is used to determine Medicaid eligibility. Depending on the individual, the bottom line of Form 1040 may have to be adjusted. See