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What is Medicaid’s Estate Recovery Program?

Posted on November 25, 2022

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If you haven’t planned effectively for your long-term care, you can get caught by Medicaid’s estate recovery program. This allows Medicaid to recoup nursing home expenses from your estate. Speak with an experienced estate planning attorney by contacting Schlessel Law.

Here’s what you need to know.

Defining the Estate

Your estate includes any assets that you own at the time of your death. That can include real estate, bank accounts, investment accounts, and retirement accounts. Medicaid cannot touch these assets until you die. There is also a spousal impoverishment provision that protects up to $130,380 (as of 2022) of your assets to care for your spouse if necessary.

Medicaid can also file a lien on your house at the point that you are institutionalized and are unlikely to return home, but cannot seize or repossess the house if your spouse, a child under 21, a blind child of any age, a disabled child of any age, an adult child of any age who lived in the home for at least two years before you are institutionalized who provided care and has lawfully resided in the home continuously since that time, or a sibling with an equity interest in the home lives there and has for more than one year prior to your entry into the nursing home. The lien can be removed if you sell the house and use the proceeds or part of the proceeds to reimburse Medicaid. 

Certain estate planning measures can protect some portions of your estate from the Medicaid clawback, but you’d need to engage in your estate planning early, ideally long before you might ever apply to Medicaid for help with your long-term care needs since there is a 5 year look-back period. Certain long-term care plans may be able to spare you the need to use Medicaid entirely. 

But Medicaid is a needs-based program!

Correct. Many who need Medicaid to pay for their nursing home care do not have many assets, to begin with. However, during the application process, your primary residence doesn’t count as one of your assets if a spouse or the individuals listed above are living at the property. The home could be worth a considerable sum, but if all of the other income and assets line up with Medicaid’s guidelines you can still get Medicaid.

Nevertheless, the law is well aware the asset exists and thus will try to recoup whatever they can against this asset, especially here in New York where the median house price, statewide, is $400,158. Here on Long Island, the price tag is even higher, at $623,000.

Estate recovery only applies to certain Medicaid benefits.

Medicaid can only use estate recovery when:

It is seen as a loan that is used for your long-term services and support.

You are not subject to estate recovery if you qualify for Medicare under the following programs:

  • Qualified Medicare Beneficiary (QMB)
  • Specified Low-Income Beneficiary (SLMB)
  • Qualifying Individual (QI) 
  • Qualified Working Disabled Individual (QDWI)

It can be very beneficial to have an attorney looking out for your interests or your loved one’s interests if you are applying for Medicaid because there are steps that we can take with your application which might allow you to qualify for one of these programs even if you aren’t sure whether you can or not. 

New York Medicaid Estate Recovery Exemptions And Limitations

Medicaid has strict eligibility criteria that consider both the assets you currently have as well as some of the financial decisions you have made in the past. Medicaid provisions also contain a clause that allows the state to claim some things from your estate, in order to recover the costs of your care after you pass away. This is called Medicaid Estate Recovery.

If a patient over the age of 55+  were eligible for Medicaid benefits or was institutionalized under Medicaid, estate recovery can occur. Estate recovery will not occur if you were 54 years old or younger and received Medicaid coverage for anything other than a nursing home stay. 

Some assets can be exempted from any recovery once the family completes the probate process after the owner passes away. Any property that was intended to go to a beneficiary named in a trust is generally exempt from Medicaid. These include policies for life insurance, jointly-owned bank accounts, 401(k) payouts, IRA, jointly-owned real estate, and many others.

Your family situation at the time you die will determine whether estate recovery can be attempted. If there is a surviving spouse, most estates will not be reclaimed. The state will also be prevented from taking the assets if there is a surviving child under the age of 21, or if the owner has a child with a permanent disability. 

However, as new laws become implemented, the specific assets that can be obtained from your estate change. A federal change allows states to use a more expansive definition of the Medicaid beneficiary’s estate. This expansion allows for the state to pursue property, such as your home, in some cases even if you are married.

How can we prevent Medicaid estate recovery? 

Reach out to Schlessel Law today. Our team can help you handle your estate and long-term care planning in a way that advantages you, and not the government. Contact us to set up a consultation today.

See also:

What is a Long Island Health Care Proxy and Why Do You Need One?

Who Decides if a Long Island Resident is Incapacitated?

How to Create a Long-Term Care Plan, for Long Island Residents

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