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My disabled mom is 60 and probably soon going to be receiving a retirement sum of around $800k from my father's 401k (who is finally completely divorcing her.) We're panicking because that will disqualify her for both her SSI and her Medicaid, as we will have to cash it out fully immediately and reinvest it (as Edison will not allow her to take payments, only a lump sum - so having the 401K disqualifies her from SSI, which means she'll need the money, but then cashing it out DQ's her from Kentucky Medicaid because the amount will be too high.) We need to find her an insurance that will cover her multiple health conditions until she is age-eligible for Medicare, or the retirement money will very quickly be gone. She wants to buy a small house and a car and then reinvest what's left. She's been told she is "uninsurable." Can any of you help us find a company that might cover her? Is there perhaps an investment account she could put it in that would allow her to take monthly distributions for living expenses but not be counted as an asset by Medicaid in KY?

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You are talking about close to a MILLION DOLLARS at risk here, and about your Mom's Medical Care.

There is no such thing now as "uninsurable". A pre-existing illness cannot be used to deny insurance coverage. With these funds it will not be a difficult thing to purchase insurance care. When the funds are gone Mom will again receive care.

The important thing now is that Mom's POA meet with an ATTORNEY. With this kind of sudden income it is not a guessing game and it is not "we hear that" and it is not the opinions of Forum members from all around the world. Your mother now needs EXPERT ADVISE FROM AN EXPERT. See a good Elder Law Attorney at once.
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Iyashi Sep 3, 2024
Unfortunately, right now we can't even afford to get an exterminator for the roaches. If you know someone who knows about all this and would take the case on the promise of getting paid, let me know.
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Full stop….. 800K is way waaaaaay to much $$$$ to ever consider DIY any of this. And actually I’d be concerned about mom being fleeced by so called financial advisors who actually are more insurance agents who will want that very serious amount of $$$$ put into annuities (breath taking commission for them on this much $).

My suggestion is to speak with 2 or maybe 3 CELA level of estate & elder way attorneys in your State and pick the one your mom and you or whomever is her POA gel best with. Perhaps speak with your mom’s divorce attorney for a suggestion (not again NOT your dad’s divorce lawyer).

and be careful on what you post on line or say to others, as you will be approached by less than scrupulous folks. That’s a life changing amount of $.
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fluffy1966 Sep 15, 2024
Well-said, and full of "good caution". Go to the UK Law School for suggestions of the Best Elder and Senior Law specialists in your State. This has to be STEP 1. Anything you do must be done with support of very astute legal advice, or you risk a "misstep" that could have such serious financial consequences.
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Obamacare is aimed at anyone without insurance regardless of income and assets. They will ask your zip code and income when you apply. If you are lower income you get subsidies. In my state if you earn over $40,000 you don't get subsidies. I had a choice of around 12 plans at various costs. Spend about 4 minutes online to get costs of the plans for your zipcode and income.
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Sorry you are dealing with this. FIRST YOU NEED qualified legal advice on several fronts!

As part of a divorce, this question of how she would get health insurance coverage SHOULD BE PART of the divorce finance settlement. If she is NOW covered under his in insurance (?), then the cost of coverage for 5 years -- 60 to 65 -- should be part of the divorce financial negotiations!

Then get with a tax/wills, trust and estate attorney, elder care attorney ASAP! The divorce attorney in theory should be able to advise on this too. If your mom takes a lump sum from his 401K that is "taxable income to her" and both state and federal taxes will need to be paid out of that. There may be ways to INSTEAD shift these funds to a "special needs trust" for her, for her care which may be a way to "shelter" these funds from taxes if she meets some of the legal definitions of "disabled."

Does she now receive SSI disability payments? Again, the right lawyers may be able to help get her qualified for Social Security Income disability payments AND PERHAPS Medicaid/Medicare disability coverage depending on what here specific disability is. For example, folks with End State Renal Disease can qualify for Medicare BEFORE age 65. That is to say, if legally disabled she may be eligible for one or more "federal" or "federal/state" health insurance program.

All to say YOU NEED TO GET THE RIGHT LEGAL HELP NOW.

Believer your mom is in Kentucky?
contact your bar association, look up tool here
https://www.kybar.org/search/custom.asp?id=2947

Or KY legal aid
https://www.klaid.org/
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Iyashi, unless you provide answers to questions we've asked, we're limited as to how much we can help you.

What are her "multiple health conditions"?

Who told her she was uninsurable? Was it a private health insurance broker?

If she will be receiving $800K, she will have enough money to buy some sort of health insurance, even if it's just catastrophic coverage. She will have enough money to live on, regardless if she loses her SSI and Medicaid. Since it's a 401k there may be some penalty for starting withdrawals early, but I'm not a CPA or financial planner so cannot say for sure, I just know that's how it is with mine. Money she withdraws and begins to use will most likely create an income tax exposure, so this is why you need to work with a CPA. You should also work with a financial and/or estate planner at this point.

I'm 65 and married but I don't think I'd ever want to buy a house at 60 (and single) and have to deal with the maintenance, repairs, taxes, insurances, etc. especially if you are the one who would be orbiting around her if/when she can no longer do it herself. It's also very expensive to hire out the work right now. She needs wise guidance from experienced professionals to help her have the best future possible. The effort to find them and the cost of consulting will be worth it. You aren't going to find anyone worth a darn to do it for you or for free.
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You need a highly qualified Elder Law attorney.

Who told you she was uninsurable? I thought the ACA made that a thing of the past.
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Iyashi Sep 3, 2024
Unfortunately, right now we can't even afford to get an exterminator for the roaches. If you know someone who would take the case on the promise of getting paid, I'd like to hear about it.

She didn't tell me what company it was...

Honestly, I need help finding an attorney for her. I am incredibly overwhelmed as it is...but i would love it if we had someone who knew the laws to take over T_T
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Brandee is correct. Obamacare is not aimed at only lower-income folks. Since this is a "life situation changing" event, your mom may be insurable with her pre-existing conditions, as long as she gets the insurance within a certain time period from the situation change. Insurable does not mean it is free, BTW, but your mom will be able to get coverage.
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Sorry to hear that you are going through this. It’s not easy.

If your mom has been diagnosed with a dementia, she is eligible for Social Security Disability and Medicare. I went through this with my husband who was diagnosed with Dementia at age 54.

He did not have a high enough work score to be eligible so the SSA rejected the application. Then I contacted the Alzheimer’s Association and they told me about a Compassionate Allowance application. There is actually an exception for Dementia related diseases. I applied and he was approved. He gets SS Disability pay and Medicare.

When you apply, it’s crucial that you make clear the date she was diagnosed. Have a doctor write that up. She won’t be eligible for Medicare until 25 months after she’s deemed “disabled”. Her doctor needs to run that date back as far as possible. She can receive the disability pay immediately. She will likely need a Representative Payee for her disability check and the bank can set that up.
Here is the link to the compassionate allowance info.

https://www.ssa.gov/compassionateallowances/
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Igloocar Sep 13, 2024
I may have missed something, But while the OP reported that her mother has multiple disabilities, I don't believe Alzheimer's was mentioned. Given her mother's age--some years under 65--Alzheime's does not seem likely unless it is early-onset. Since her mother is talking about buying a house and investing, it also doesn't sound like she has Alzheimer's. I understand your husband was diagnosed at age 54, but the information we've been given doesn't suggest dementia in this case (again, assuming I haven't missed this),
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You need a qualified estate attorney or tax attorney - full stop. Stop telling us about the roaches and start calling to find one who will work on a contingency. She will be getting this settlement so she should be able to pay the costs. Many attorneys work this way. There may be an appropriate trust that could be set up to accept the money and not mess up her benefits. Unless you educate yourself to the point you have a quick law degree, you simply cannot negotiate this without expert advice.
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fluffy1966 Sep 8, 2024
Well-said. Forgo all other concerns and immediately seek highly informed legal advice from specialized Elder Law/Special Needs Trust/Social Sec. Disability attorney. You are likely to make a misstep without this, and the misstep will have far reaching ramifications. You have already been given bad information, "Mom is not insurable" You must immediately have the best of highly informed Legal advice from an attorney who is a specialist in Trusts, and who will work on a contingency. Go no farther without legal assistance, and go for "the best" legal assistance.
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There maybe a way to transfer Moms portion so she is not penalized. Maybe set her up with her own 401k and transferring from one to the other. When the company I worked for did away with pensions, it bought me out. I did not cash that check. My finance guy rolled it into an IRA. She is going to have a big tax debt. You need to talk to an Estate Lawyer, I guess it would be? Do not do this on your own.

Yes Mom will lose her Medicaid and SSI. She will have 800k! If she watches her spending that should last her a long time.
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Iyashi Sep 3, 2024
Unfortunately, right now we can't even afford to get an exterminator for the roaches. If you know someone who would take the case on the promise of getting paid, I'd like to hear about it.

Honestly, I'd love to have a professional handling this. We are terrified and I am incredibly stressed. But I did find out that KY Medicaid does not count IRA's, so that's a possibility. I think I need help finding someone who knows about KY law and Medicaid and all that...
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