This will not affect her Medicare benefits, but could present a problem for Medicaid. Most states have a $2,000 asset limit for Medicaid benefits, so if your mother invests the funds she will become ineligible. Also, in most instances any transfer of assets causes a period of ineligibility for benefits.
There are some exceptions to these rules and strategies for “spending down” excess assets. For instance, your mother could prepay her funeral expenses. Some states also permit the transfer of funds to a pooled disability or (d)(4)(C) trust. We would recommend consulting with a local elder law attorney who could advise you on the options available in your state.
Harry S. Margolis practices elder law, estate, and special needs planning in Boston and Wellesley, Massachusetts. He is the founder of ElderLawAnswers.com and answers consumer questions about estate planning issues here and at AskHarry.info.