MEDICAID ESTATE RECOVERY
What Seniors Should Know
What is Estate Recovery?
Not many people are aware of the 2009 Estate Recovery act enacted by the Federal Government that places the largest asset the family owns (their home) in jeopardy of a Medicaid lien. When I tell people about this law they are unaware of it. So I did some research and found this information on the West Virginia Attorney Generals website. This validates the information I’ve been giving seniors for several years.
“Estate Recovery is a collection program required by a Federal law (42 U.S.C.
§ 1396p). This law requires all States to “recover” money spent by Medicaid on
“long-term care” (nursing-home or home and community-based care) by collecting
it from the estates of people who received such care after reaching age 55. Most of
the money collected goes to the Federal government, not the States. States that fail
to implement Estate Recovery collections can be cut-off from Federal Medicaid
funding, but no State has yet been penalized for failure to properly implement the
Estate Recovery requirements.
% Estate Recovery does NOT create a debt owed by the deceased Medicaid recipient’s
heirs, but rather creates a claim or lien only against the assets in the
deceased’s estate. The State Medicaid agency (called the “Bureau of Medical
Services”) files a claim against the estate and can enforce it in the same manner
as any other creditor of the estate.
% Many assets that were exempt for purposes of determining Medicaid
eligibility (such as the home) are no longer exempt after the Medicaid-recipient
dies, and are subject to Estate Recovery.
% The maximum amount of an Estate Recovery claim is the value of the estate,
or the amount spent by Medicaid on long-term care after the deceased recipient
reached age 55, whichever is less. If the assets in the estate are insufficient to
pay the claim, the remainder of the claim is extinguished and does not
constitute a debt”.
As a reverse mortgage specialist I help people “Age in Place”. I have worked as a clinician in hospitals and nursing homes. So my personal agenda is to help people stay there by providing the financial means to do so. The Estate recovery act allows state to attach a lien to the property of individuals who receive Medicaid benefits. If a person secures a reverse mortgage they protect at least 60% of that asset against this Medicaid lien. The state can only attach whatever remains after the reverse mortgage is paid. I always ask seniors and family members if they have long term care insurance. Most people do not because it is cost prohibitive. So the only way to protect the asset is with a reverse mortgage.
While I’m not an attorney it seems the message is clear. If someone is unable to pay the $7,000 nursing home fees and goes on Medicaid they are going to allow the government to place a lien on their property. It usually doesn’t take long for the equity to evaporate that took a lifetime to build.
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This article has been republished in part or full from an Age in Place Professionals member's website. Read the orignal article at the author's website >>