You Need to Know About Medicaid Estate Recovery
As more and more seniors require nursing home care, the government is expanding its efforts to recover taxpayer dollars spent on long term care for Medicaid recipients. If your spouse, parent or relative is admitted to a nursing home at age 55 or older and accepts Medicaid benefits to pay for all or a portion of the cost, it is important to understand the governmentís right to be repaid by going after assets in the Medicaid recipientís estate, and in some cases, other assets in which the recipient had an interest. This process, known as Medicaid estate recovery, often extends to real estate and could affect your family home, farm or other real property. In fact, the family home is often the prime target of the state's Medicaid collection efforts. Because the surviving spouse, children or other heirs of the nursing home resident often reside on such property, having a lien placed on the property can create many problems for other family members. If your loved one is receiving or received Medicaid benefits in the past, consult an attorney about how the recipient's property may be affected.
What If a Spouse or Children Live in the Home?
If a spouse survives the deceased Medicaid recipient, the state will not enforce its claim against the recipientís house while the spouse is alive. After the surviving spouse dies, the state may enforce its right of recovery. If the Medicaid recipient is survived by a minor child, the state will not enforce its claim against the recipientís house until the child reaches the age of majority. If the recipient is survived by a blind or disabled adult child, the state will not enforce its claim while such child is living. If the state does try to enforce its recovery claim in such circumstances, the recipient's spouse or child should retain an attorney for representation.
This article focuses on the family home and how the heirs or next of kin may be affected by Medicaid estate recovery. However, other assets may be affected as well, such as bank accounts, investments, life insurance, annuities, and other types of assets. For comprehensive guidance on the types of assets that are at risk to Medicaid estate recovery, consult an attorney in your state. Recommended guides include: How to Protect Your Family's Assets from Devastating Nursing Home Costs: Medicaid Secrets (5th edition) and Die Smart: 11 Mistakes That Cost Your Family When You Die: Probate, Living Trusts, Power of Attorney (And More).
Medicaid Estate Recovery Varies From State to State
The states pass their own laws and regulations regarding recovery of Medicaid benefits. For information on how Medicaid estate recovery is enforced in your state, contact your stateís Department of Health and Human Services.
How is Medicaid Estate Recovery Enforced?
After a Medicaid recipient is deceased, the state may recover from the recipientís probate estate and other assets for the cost of nursing home care, hospital services, skilled nursing care, home health services, medications, and other services covered by Medicaid. States are required by federal law to seek reimbursement for Medicaid benefits from recipientsí estates. However, not all states comply with this federal law in a consistent manner.
The state may place a lien on the Medicaid recipientís home or other real estate. If a probate has not been opened, the state may open a probate of the recipientís estate. If the recipientís estate is already in probate, the state may file a claim in probate to recover the amount of benefits paid. The executor or personal representative of the estate may also negotiate a settlement of the recovery claim prior to a probate claim being filed.
Waivers and Exceptions to Medicaid Estate Recovery
There are exceptions when the state will not pursue recovery against a recipientís estate. For example, if the Medicaid recipientís estate is valued below the stateís threshold amount for recovery, the state will not pursue a claim against the estate. There are also circumstances in which the state will grant a waiver of its right to recoup Medicaid benefits. One type of commonly granted waiver is when one or more heirs of the Medicaid recipient operate a farm or other business on estate property. To the extent a Medicaid recovery claim against the property would constitute an undue hardship on the heirs, the state may grant a waiver.
What If There Are No Assets In The Probate Estate?
Planning your estate in a way that avoids probate may not prevent the state from pursuing repayment of Medicaid benefits. Each state passes its own laws regarding which types of ownership interests it will recover against. Therefore, the types of assets subject to Medicaid estate recovery are not the same in every state. Several states currently pursue both probate and non probate property in which the Medicaid recipient had an interest at death, including real estate owned as joint tenants, joint bank accounts, pay on death accounts, life insurance, life estates, and interests in certain types of trusts, including living trusts. Even if you engaged in estate planning methods to avoid probate, your property may be at risk to a Medicaid estate recovery claim. If your objective is to preserve assets for your children or other heirs, discuss your estate with a Medicaid planning lawyer.
Medicaid Planning To Protect Your Home
Even if your spouse or parent only stays in a nursing home for a short period of time, the amount of Medicaid benefits expended can easily exceed the value of your family home and other assets. Engaging in Medicaid planning early can make a difference in whether you keep your family home or maintain the standard of living of the spouse, children or other heirs of a Medicaid recipient. To learn about the steps involved in this process, see Medicaid Planning.