Medicaid Estate Recovery

We are often asked, “will Medicaid come after us?” “Will Medicaid take the house?” “Won’t Medicaid  get everything?” While the reach of the State can be long, there are limits.

Since 1993, every state must establish a program to recover Medicaid expenditures from the estates of recipients. 42 U.S.C. § 1396p(b)(1)(B). This is known as “estate recovery.”  In theory states can impose liens on personal or real property 42 U.S.C. § 1396p(a) or seek to recover from the Medicaid recipient's estate. 42 U.S.C. § 1396p(b)(1)(A). States may adopt an expanded definition of estate which is broader than the probate estate.

It may seem odd, given that a Medicaid recipient must be impoverished in order to receive Medicaid, but frequently a residence, one of the few assets a recipient is permitted to retain, is titled in the name of a deceased recipient. And under federal law, a state must seek to recover against the residence in order to qualify for the Medicaid program. West Virginia v. U.S. Dep't of Health & Human Servs., 281 F.3d (4th Cir. 2002).

Each state is required to seek reimbursement from the probate estate of any Medicaid beneficiary, of any age, receiving “long-term care.” 42 U.S.C. § 1396p(2), referencing 42 U.S.C. § 1396p(b)(1).  There are restrictions and exceptions. The State must wait until after the death of the community spouse. 42 U.S.C. § 1396p(b)(2). There is no recovery against the estate of a recipient who is survived by a child who is blind or disabled or a child under age 21. 42 U.S.C. § 1396p(b)(2)(A).

Under federal law, states may impose an expanded recovery to include joint tenancy interests, life estates and other interests that lapse at death. But there is no mechanism set forth to do so. 42 U.S.C. § 1396p (b)(4)(B). Most states have deferred from expanding the definition of estate beyond that of a probate estate. But many states have legislation to expand estate recovery.

Exceptions

The State cannot file lien unless:

There is a Court judgment for incorrect payment;

The Recipient is in Skilled Nursing Facility (SNF) and cannot reasonably be expected to be discharged (there are exceptions);

If there is a spouse, child under 21, a blind or disabled child lives in the home

If there is a sibling with an equity interest lives in the residence, and was living there one year before Medicaid recipient entered a SNF

A lien must be discharged if individual leaves the SNF and returns home

A valid lien may be executed upon if following are living in the home:

• Spouse
• Blind or disabled child
• Child under 21
• Sibling with equity interest who lived in the home at least one year before individual went into SNF
• A Caretaker Child

WHAT IS AN ESTATE FOR MEDICAID PURPOSES?

The Delaware Statute.

Twenty-five Del. C. § 5001 Definitions

c) "Estate" means all real property, as well as all personal property which constitutes assets of the individual's estate as described in Chapter 19 of Title 12.

(e) "Long-term care" means a service provided in a long-term care facility or in the home, under federally approved home and community-based services, as an alternative to institutionalization.

5003 Estate recovery.

In the case of any individual receiving long-term care from the Department, the Department shall seek recovery for any disbursements made on behalf of such individual under the State Plan for Medical Assistance, from the individual's estate or upon sale of property subject to a lien. The Department will seek recovery of moneys expended for correctly paid medical assistance from all periods of eligibility for medical assistance on behalf of the individual only:

(1) After the death of the individual and the death of a surviving spouse who was residing in the home on a continuous basis; and

(2) In the case of liens on an individual's home, when there is no:

a. Surviving child who is blind or disabled … who was residing in the home on a continuous basis immediately prior to the death of the individual; or

b. Nondisabled child or sibling of the individual lawfully residing in the home, who has resided there for a period of at least 2 years immediately prior …who … provided the care that permitted the individual to reside in the home rather than in a long-term care facility; or

c. Minor child who was residing in the home on a continuous basis immediately prior to the death of the individual, until that child reaches majority.

HOW DOES MEDICAID FILE CLAIMS?

The State may asset a claim against an estate in the same manner as any other creditor pursuant to 12 Del. C. § 2104.

Section 2104 (1) permits a claim to be filed against an estate by “[t]he claimant may deliver or mail to the personal representative a written statement of claim indicating the basis ….” The State routinely mails an estate recovery letter to the Medicaid recipient’s representative, if there is one, within a few months of the recipient’s death. Often the recipient’s representative is not the personal representative of the estate. In that instance the claim is not properly asserted. In recent years the State has filed claims with the Register of Wills to avoid sending the notice to the incorrect party.

Obviously a complex area of the law.