Planning Ahead with your Estate to Avoid Medicaid Estate Recovery

Medicaid provides valuable health care coverage to millions of low-income adults, children, women carrying children, persons with disabilities, and the elderly. The program is jointly funded by states and the federal government and is administered by the states. For many seniors, Medicaid provides them with the life-saving nursing home and in-home nursing care they need to live comfortable, dignified lives.


However, not all services provided by Medicaid are completely free and recipients sometimes need to pay back the state and federal governments for certain types of services rendered, particularly nursing home or home care aid. In fact, the state may go so far as to try and recover assets from a deceased’s estate if he or she received nursing home or home health care after the age of 55.


Under 18 NYCRR Section 360 -7.11, the state of New York can attempt to recover up to 10-years worth of Medicaid services provided before the deceased’s passing if the individual received nursing home care, had been deemed a “permanently institutionalized individual, and owned a home. However, it is important to know if the deceased left behind a surviving spouse, child under 21-years old, or an adult child deemed permanently blind or disabled then Medicaid cannot place a lien on the home.


Furthermore, if the deceased was in a nursing home and deemed a permanently institutionalized individual but returned home prior to passing, Medicaid will not put a lien on the home. Medicaid will be informed of the deceased’s passing after the executor of his or her state files an estate tax return and submits the estate into probate. During the probate process, the state will recoup as much of the monetary value of the benefits provided and leave the rest, if any, to the estate’s beneficiaries.


There are certain ways to avoid these lines, by estate planning and by exemptions provided under the law but in either case, families with persons receiving nursing home care and in home care from Medicaid should plan ahead. One important exception is the hardship exemption where the seizure of the estate might be the only source of income for beneficiaries, such as a farm or other small business, or is the primary residence of one of the beneficiaries and is of modest value.


Another technique involves placing the home into an irrevocable trust to avoid going through probate. Under an irrevocable trust, sometimes called a Medicaid trust in these types of situations, the trust is managed by a spouse, child, or sibling and will pass on to this individual after passing. By thinking ahead, seniors receiving Medicaid benefits can avoid many of the pitfalls of our entitlements system and pass on their estates to loved ones.

Contact Information