Estate Recovery
What is Estate Recovery?
Medicaid for long-term care is a unique government program in that it tries to seek repayment for benefits provided. This is known as estate recovery. After the person receiving Medicaid benefits passes away, the state Medicaid agency totals the amount of benefits spent on that individual. They then see if there are any assets available to recover from. This is usually in the form of probate assets, such as a home or other assets that did not have a named beneficiary. Although, some states have expanded estate recovery beyond probate assets.
Liens Against the Home
The most common asset the state may attempt to recover against is the Medicaid recipient's home. A lien may be placed on the home while someone is receiving benefits, assuming they are not expected to return home. This allows Medicaid to recoup their expenditures from the proceeds of the sales of the home. A lien cannot be placed on the home if it is occupied by the person's spouse, minor or disabled child, or a sibling who has ownership interest and has lived in the home for at least one year prior to applying for benefits.
While the home is an exempt asset for qualification purposes, it's important to note that transferring the home for less than fair market value or to a trust will trigger a penalty period of Medicaid ineligibility and selling it for cash will cause the individual's amount of countable asset to increase. Be sure to speak with a qualified Medicaid planner before transferring or selling a home.
Surviving Spouse
Whether the state is attempting to recover against the home or another asset, they cannot seek repayment if the Medicaid recipient's spouse is still living. However, some states will attempt to resume estate recovery after the passing of the surviving spouse.
Can Estate Recovery be Avoided?
In some cases, yes. Through proper planning, the risk of estate recovery can be reduced or avoided completely. It's important to speak with a Medicaid planner who is familiar with your state's specific rules and establish a plan before going on Medicaid benefits.
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