Short Answer

In North Carolina, you can often preserve VA healthcare and Medicaid by promptly reporting income and asset changes, and by routing any new assets for a Medicaid recipient into an allowed vehicle—typically a properly drafted special needs trust or pooled trust. Avoid gifting or disclaiming an inheritance without advice; those moves can trigger Medicaid transfer penalties. Handle inherited real estate carefully, and plan ahead for Medicaid estate recovery rules.

Understanding the Problem

You want to know whether you can keep VA healthcare and your spouse’s Medicaid while SSDI starts and your spouse inherits North Carolina real property. The decision point is: how do you receive and structure the new income and the inherited asset so your spouse remains Medicaid-eligible in North Carolina?

Apply the Law

North Carolina Medicaid looks at income and “countable resources” for eligibility. New income (like SSDI) and new assets (like inherited real estate) can change those counts. State law also governs what happens if a Medicaid recipient later dies (estate recovery), how renouncing an inheritance works (renunciation/disclaimer), and how trusts affect creditor access to assets. The main forum for eligibility is your County Department of Social Services (DSS). You must promptly report changes; specific reporting timelines are stated in DSS notices and can change.

Key Requirements

• Report changes: Tell your County DSS promptly about new income (SSDI) and new assets (inherited property).
• Use allowed planning tools: For a Medicaid recipient, direct inherited assets into a first‑party special needs trust or a pooled trust to avoid creating countable resources.
• Avoid problematic transfers: Gifting or disclaiming an inheritance can be treated as a transfer for less than fair value and cause a penalty period.
• Trusts and creditor rules: Assets you keep control over (like a revocable living trust) generally remain reachable by your creditors and countable; discretionary/third‑party structures offer different protections.
• Estate recovery awareness: After a Medicaid recipient’s death, the State may claim against the estate; planning should account for this.

What the Statutes Say

• North Carolina Gen. Stat. § 108A-70.5 (Medicaid Estate Recovery) – authorizes the State to seek recovery from a Medicaid recipient’s estate after death.
• North Carolina Gen. Stat. § 31B-3 (Effect of Renunciation) – a valid renunciation/disclaimer treats you as predeceased for that interest, changing who takes the property.
• North Carolina Gen. Stat. § 36C-5-505 (Claims Against the Settlor) – property in a revocable trust remains subject to the settlor’s creditors and, generally, to eligibility counting.

Analysis

Apply the Rule to the Facts: Your SSDI will increase household income; that alone usually does not end VA healthcare, but your spouse’s Medicaid eligibility can be affected if countable income or resources go up. The inherited North Carolina real property, once accepted, is typically a countable resource for your spouse unless it is handled through an allowed tool before it becomes “available.” Using a properly drafted first‑party special needs trust or pooled trust for the spouse’s inheritance can preserve eligibility. Avoid disclaiming or gifting the inheritance; that can be treated as an improper transfer and cause a penalty.

Process & Timing

1. Who files: You or your spouse (or your authorized representative). Where: Your County Department of Social Services (DSS) in North Carolina. What: Report the SSDI start and the inheritance; if using a special needs or pooled trust, execute the trust agreement and supporting documents (deed, assignment) before the asset becomes available to the spouse. When: Report changes promptly per your DSS notice; trust and deed work should be completed before acceptance or receipt of funds to avoid creating countable resources.
2. Have the trustee receive the inherited asset (or sale proceeds) directly, if possible. For inherited real estate, coordinate with the estate’s personal representative and the Register of Deeds to deed the property into the trust (or sell and fund the trust) without the spouse taking title outright. County recording and DSS processing times vary.
3. DSS will review and issue an updated eligibility determination. Keep copies of the trust, deeds, and any DSS correspondence for your records.

Exceptions & Pitfalls

• Disclaimers can backfire: A renunciation that diverts an inheritance away from a Medicaid recipient may be treated as a disqualifying transfer for Medicaid purposes, even if valid under state property law.
• Revocable trusts don’t shield countable assets: Assets you control in a revocable living trust are generally still countable for eligibility and reachable by your creditors.
• Trust setup details matter: First‑party special needs and pooled trusts have technical requirements (including who can create them and how they repay Medicaid). Get these right before funding.
• Real estate nuances: If the spouse takes title to the inherited property before planning, it may become a countable resource; selling, retaining, or converting it to an exempt use depends on current Medicaid rules.
• Estate recovery later: After a Medicaid recipient’s death, the State can assert a claim against the recipient’s probate estate. Proper notices in the estate proceeding and careful titling affect outcomes.

Talk to a Estate Planning Attorney

If you’re dealing with new SSDI income and an inheritance while trying to keep VA care and Medicaid, our firm has experienced attorneys who can help you understand your options and timelines. Call us today.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.