Medicaid: Right To Reimbursement From Your Estate
Medicaid has a federally imposed obligation to try to get reimbursed from your estate after you die for the amount Medicaid spends on you.
Under the federal requirements:
- States are required to seek recovery for services provided to a person of any age in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution.
- States are also required to seek recovery of payments from the estates of people age 55 or older for payments for nursing facility services, home and community-based services, and related hospital and prescription drug services.
As with other parts of Medicaid, each state has its own rules on how it handles reimbursements from estates. What happens under those rules as a practical matter also differs. To learn what happens in your state, enter "Medicaid" "estate recovery" and the name of your state into your favorite search engine or ask a local lawyer who specializes in elder care issues. You can find such a lawyer at www.naela.org or www.elderlawanswers.com/content/state_attorneys.asp
Medicaid can recover what it spends from a deceased Medicaid beneficiary's entire estate. This discussion focuses on the family home, because, for Medicaid recipients, a family home is usually the only asset of any value that was exempted as an asset for Medicaid eligibility purposes.
To make sure this right isn't meaningless, Medicaid is entitled to place a lien on your home while you are alive.
A lien is a legal procedure, the most commonly known example of which is a mortgage. A note is made at the official title registry which indicates that the owner of the lien, known as the "lien holder", has a right to receive part of the sale proceeds. The lien holder is notified of any pending sale or refinancing, which, if completed, allows the lien holder to receive the amount due it from the proceeds of the sale or refinancing.
Medicaid is prohibited from forcing the sale of the home so long as your spouse or a minor or disabled adult child or a close relative lives in the home, although Medicaid may place a lien on it to assure that if a sale does take place, Medicaid will be reimbursed from the proceeds.
As with other parts of Medicaid, each state has its own rules about how it handles reimbursements from estates. However, federal regulations have set some requirements. They include:
While you are living, Medicaid cannot force a sale of your home. Only liens may be filed against your property.
- A lien must be filed if you are "permanently" institutionalized â€¢ permanently in need of custodial care whether you receive it in a nursing home or at home, unless an exception comes into play. You are given an opportunity to a hearing before a judge to determine whether you are "permanently" institutionalized and will require custodial care for the rest of your life.
Although the federal law "requires" states to place the lien, compliance with this law is spotty at best. To find out the reality in your state, speak with a local disease specific non-profit organization, a social worker or an elder care attorney. (See: www.naela.org )
A lien cannot be placed on your home if:
- You and your doctors show that you will be able to return to your home. Even if there is no hearing to determine whether you will be able to return to your home, any lien placed on your home must be removed if you no longer need long term care. OR
- Your home is occupied by any of the following people:
- Your spouse.
- A dependent child.
- A child of any age who has lived with you in the home and cared for you for at least two years, effectively postponing your need for long term care.
- A sibling who has an equity in the home interest and has lived in the home at least twelve months. There is no requirement of care on the part of the sibling.
After your death:
- Each state may attempt recovery for a broader range of services than just those after the start of your need for long term care. They may make a claim against your estate for the following charges provided they were delivered to you at age 55 or older:
- Nursing facility services.
- Home and community based services.
- Related hospital and prescription drug services.
- The claim may be against any property that passes outside the estate (such as jointly owned assets, assets in a living trust, or life estates) as well as property that passes through the estate.
- While states are permitted to place liens on your home after your death they are prohibited from forcing the sale of the home as long as there is a living spouse or dependent child, either minor, blind or disabled.
If you own property, even it is only your home, before asking Medicaid for help for Custodial Care, find out if you can do some planning to protect your property for your spouse and heirs. Get professional help. Before meeting with the professional, it would save you time (and therefore money) to review the Transfer of Assets Rules.
Recovery from People with Long Term Care Insurance. Applying the rules as outlined above, states disregarded assets or resources of people to make them eligible for Medicaid even though they had long-term care insurance policies that paid some of the nursing home charges. Federal law requires that those states recover all Medicaid costs for nursing facility and other long-term care services from the estate of people who had such policies. Due to the timing of the implementation, five states, California, Connecticut, Indiana, Iowa, and New York are exempt from this requirement.