Can I Prevent Medicaid Estate Recovery?

Medicaid Estate Recovery Concept

The Medicaid estate recovery program is a federally mandated process through which Medicaid gets reimbursement for long-term care benefits (including nursing home costs) from the benefit recipient’s estate after their death, often by forcing sale of the recipient’s home. This article explains how a recipient can prevent Medicaid estate recovery with assistance from an experienced Medicaid planning attorney.

What Is Medicaid Estate Recovery?

The Medicaid estate recovery program (sometimes referred to as MERP or MER) is a federally mandated program through which Maryland Medical Assistance, the state’s Medicaid agency, seeks reimbursement for all long-term care costs paid to a benefits recipient. The recovery effort follows the Medicaid recipient’s death, with reimbursement sought from the estate.

A 1993 federal law requires states to have an estate recovery program for long-term care costs for all recipients aged 55 years and older. Estate recovery is also required for recipients under 55 years of age who were permanently in a nursing home or other facility. The funds collected through Medicaid estate recovery return to the state’s Medicaid program, to pay for services for other beneficiaries.

Can Medicaid Force Sale of the Family Home?

In Maryland, Medicaid can seek recovery from any probate assets in the estate of a deceased benefit recipient. The decedent’s home often is the only asset of sufficient value to provide the reimbursement.

In some situations, Medicaid has the right to put a lien on the home in order to get reimbursement for benefits from the estate. It makes no difference if the home is left to a beneficiary in the decedent’s will. Without other assets in the estate to repay the benefits, selling the family home is the only way to satisfy the lien.

The estate recovery program often comes as a surprise to a benefit recipient and to their family after a recipient’s death, since the home is typically an exempt asset for the purpose of determining eligibility for Medicaid benefits. However, Medicaid’s right to recover reimbursement for benefits from a deceased recipient’s estate is entirely separate and distinct from the home’s status as a non-countable asset for eligibility purposes.

Applicable laws and regulations do impose some limitations on Medicaid’s ability to recover from the estate by forcing sale of a deceased recipient’s home. If a family member can qualify for one of the exceptions to estate recovery, the estate may be able to avoid sale of the home. The primary limitation prevents Medicaid from putting a lien on the home if any of the following relatives lives in the home:

  • The surviving spouse
  • A child under the age of 21 years
  • A disabled or blind child of any age

In the case of these exceptions, Medicaid may still pursue estate recovery if the home is sold or the exempted recipient passes away or moves.

In addition, there is an undue hardship exception under which a survivor of a deceased recipient living in the home may seek a hardship waiver. Generally, hardship can only be established by a dependent who lived in the home when the recipient passed away, resided in the home continuously for at least two years before the death, and cannot find another place to live.

How to Prevent Medicaid Estate Recovery

In some situations, it is possible to prevent Medicaid estate recovery with advance planning. Estate planning and Medicaid planning strategies and tools can protect assets, including a benefit recipient’s home. The best approach for protecting a Medicaid recipient’s home depends on the recipient’s family circumstances and financial situation, as well as the timing of planning.

The Medicaid estate recovery program is governed by complicated federal and state laws and complex state regulations, as is the Medicaid program. Assistance from a knowledgeable estate planning and Medicaid planning lawyer is essential to put asset protection strategies in place without running afoul of Medicaid laws and rules. Planning in advance before Medicaid benefits are necessary provides the most flexibility for protecting assets.

Important Caution: If you anticipate the need for Medicaid benefits (or already receive them), you should never make property transfers or changes in the ownership of real estate or other assets without consulting with an experienced Medicaid planning lawyer. Doing so on your own without legal counsel can incur penalties and jeopardize your ability to qualify for Medicaid benefits. This caution applies without exceptions, whether you are trying to qualify for Medicaid benefits or trying to avoid estate recovery.

While the best strategy for protecting your home is to get help with Medicaid planning before you enter a nursing home, there may be ways to protect your home even after you are in a nursing home. In that case, you should talk with a Medicaid planning attorney as soon as you become aware of the estate recovery issue.

Finally, if your loved one’s estate is facing a claim for Medicaid estate recovery, you should talk with a lawyer who understands not only estate recovery but also the Maryland probate process. In some situations, the limitations and exceptions in the laws and regulations may be available to protect your family home.

Talk with a Rockville Medicaid Planning Attorney

The Law Office of Henry Nash provides clients with comprehensive services relating to Medicaid planning, including protecting the family home from estate recovery. In our elder law practice, we assist seniors and their families with the full range of matters relating to estate planning, probate and estate administration, and the other special legal needs of seniors and their families.

We work with clients in Rockville, throughout Montgomery County and elsewhere in Maryland. We also assist out-of-state clients who have probate matters in Maryland. If you have any questions about any of our services, we welcome you to call us at (301) 998-6111 or contact us through our online form.

Categories: Medicaid