A coworker asked me this morning whether I know anything about the following: The coworker has a friend whose parents set up college savings plans (Edvest) for the friend’s children. The county or state is now seeking reimbursement from those plans for medical assistance benefits. This particular circumstance had never occurred to me, despite my interest in all things FA-related and all things Medicaid-related (both personally and for my work). Once I did a little bit of research, I decided the government is probably on solid ground, although I did suggest to my coworker that she tell the friend to consult a lawyer, just in case there are details that would put the grandparents’ payments into an exception to the divestment rules. Anyway, I’m curious as to whether anyone in CC world has encountered this type of situation. Thank you.
It sounds like Medicaid “claw-back” or estate recovery. Are the parents deceased?
http://www.huffingtonpost.com/deane-waldman/beware-of-the-medicaid-bi_b_10185884.html
I assume that the grandparents are still alive, are applying for Medicaid, and are being told that their contributions to the college savings plans are divestments, which have to be paid back to them (and then spent down, if necessary) before they can be eligible for benefits.
529 plans owned by the grandparents are considered assets of the grandparents. They are subject to all of the same Medicaid rules as cash.