Medicaid is a State and Federal program that helps individuals pay for medical services such as home, hospital and nursing home care. In order to be eligible, specific requirements must be met. While a Medicaid recipient can retain some limited assets, most will be spent down to pay for care. What many people do not realize is that Medicaid retains a right to go after the property the recipient is allowed to keep while alive. After a recipient dies, the government can seek to recover the money it paid out by attempting to seize any exempt assets that still remain. This is an important point as frequently families engage in Medicaid planning thinking they can permanently protect assets from Medicaid. However, if they don’t work with an experienced attorney, they may end up losing some of the money they thought was preserved.
States are required to seek reimbursement from Medicaid beneficiaries’ estates upon their deaths through their Medicaid Estate Recovery Program (MERP). However, there are several limitations placed on states, including but not limited to the following:
- MERP only applies to beneficiaries who were 55 or older when they received Medicaid benefits and beneficiaries of any age who were permanently institutionalized.
- States can only make a claim against asset(s) the beneficiary had a legal interest in at the time of death. Some states only consider probate assets (those assets that are titled in the sole name of the beneficiary or as a “tenant in common” if jointly owned). Other states will look to probate assets as well as joint property, beneficiary accounts and other similar types of property.
- Recovery can only occur after the death of the Medicaid recipient’s surviving spouse (if any), but there is also a statute of limitations. If the spouse dies after expiration of the statute, the state cannot file a claim against the estate.
- A claim cannot be made if a recipient has a surviving child under 21. Once the child turns 21, the state may seek recovery but only if it is within the statute of limitations.
- If the recipient is survived by a child who is blind or disabled, the state cannot seek reimbursement regardless of the age of the child.
Note that states also may not seek reimbursement through MERP if it would place undue hardship on the surviving family members.
Appropriate Medicaid planning can avoid this result, but the best result requires starting early as possible. Don’t wait until you or a loved one is in imminent need of care because your options will be more limited.
If you or a loved one may need community or nursing home Medicaid, contact me to discuss your long-term care planning options.