Federal law requires each state to attempt to recover the benefits paid by Medicaid from the estate of a Medicaid recipient after the recipient’s death. While Medicaid planning is permissible, and Medicaid even promulgates rules to help us plan for future eligibility, many people do not recognize the benefits or avail themselves of these rights. If planning is not instituted in advance of an application for benefits, a Medicaid recipient’s home may be sold to settle Medicaid’s claim.
After the death of a Medicaid recipient who was at least 55 years of age when they received benefits, or of any age when they were permanently institutionalized, the state may seek recovery, from their estate, for benefits paid for nursing home care, home and community-based services and other related hospital and prescription drugs services. This means that property that is held in the name of the Medicaid recipient alone is, at their death, subject to recovery for services rendered within 10 years of recipient’s death.
In addition to the right to recover from the estate of the Medicaid recipient, Medicaid may place a lien on real estate owned by the recipient during his or her lifetime if determined “permanently institutionalized” unless certain depend- ent relatives are living in the property. Medicaid may not impose a lien if a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living in it.
Once a lien is placed on the home, and if the property is sold while the Medicaid recipient is living, not only will he or she become ineligible for continuing Medicaid benefits upon receipt of the proceeds of the sale, but Medicaid will require reimbursement for the cost of the benefits already provided.
There are circumstances under which the value of a house can be protected from Medicaid recovery. Medicaid cannot recover as long as it is not a probate asset. If the house is in a revocable or an irrevocable trust, if it has been transferred to another individual or the Medicaid recipient relinquished his or her ownership interest, Medicaid will not be permitted to recover any portion of the benefits it paid. It is important to know your rights and to understand how to protect your assets before an application for Medicaid is prepared and submitted. Berwitz & DiTata LLP can review your plan to advise how best to protect your assets and minimize estate recovery.