Protecting Your House from Medicaid Estate Recovery
After a Medicaid recipient dies, the state must attempt to recoup from his or her estate whatever benefits it paid for the re...Read more
Find out how to avoid Medicaid estate recovery.
Federal law requires each state to attempt to recover long-term care benefits from Medicaid recipient’s estates after their death. This is known as Medicaid estate recovery.
If a Medicaid recipient had failed to protect their house, it may need to be sold to settle the claim.
For Medicaid recipients ages 55 or older, states must seek recovery of payments from their estate for the following:
States may also recover costs for any medical care covered by Medicaid, not just the cost of long-term care.
There are a few exceptions regarding when the state can recover through MERP. These include the following:
States must attempt to recover funds from the Medicaid recipient’s probate estate (property held in the recipient’s name only). Securing Medicaid benefits requires that the recipient have extremely limited assets. So, the only probate property of substantial value that a Medicaid recipient is likely to own at death is their home.
Note that some states also opt to seek recovery against property in which the Medicaid recipient had an interest but that passes outside of probate. This is called “expanded” estate recovery and may include jointly held assets, assets in a living trust, or life estates.
(States that do not use expanded estate recovery cannot make a claim against a Medicaid recipient’s home if it is not in their probate estate.)
In addition to the right to recover from the estate of the Medicaid beneficiary, state Medicaid agencies may place a lien on real estate owned by a Medicaid beneficiary during their lifetime (unless certain dependent relatives are living in the property).
If Medicaid places a lien on your home, it means that Medicaid has a legal claim to that piece of property. In other words, the state Medicaid agency has the right to use your home as collateral if the estate is unable to pay the costs of the Medicaid recipient’s care.
The state cannot 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 there.
If a lien is placed on the Medicaid recipient’s property and it is sold while the recipient is alive, they may no longer qualify for Medicaid. This would be the case if, for example, the proceeds from the home’s sale exceeded the Medicaid asset limits in the recipient’s state.
The beneficiary also would have to satisfy the lien by paying back the state for its coverage of care to date. In some states, the lien may be removed upon the beneficiary's death. In others, the state can collect on the lien after the Medicaid recipient dies. Check with your attorney to see how your local agency handles this.
There are some circumstances under which the value of a house can be protected from Medicaid recovery:
When the house is in the spouse’s name and the Medicaid recipient had relinquished their interest
If the house is in an irrevocable trust
When some children or relatives of the Medicaid recipient qualify for an undue hardship waiver
For example, if a Medicaid recipient's daughter took care of him before he entered the nursing home, and she has no other permanent residence, she may be able to avoid a claim against his house after he dies. Be sure to speak with your attorney to find out whether the undue hardship waiver may be applicable.
Medicaid estate recovery varies by state and can be complicated to navigate under the best of circumstances. Find a qualified attorney in your area today to help you make decisions that will work for your unique situation.