Families are often relieved to know that Medicaid Planning may offer options to help cover the cost of a nursing home stay or long-term care for a loved one. But what happens when that loved one passes away? Planning can allow for some assets and resources to be protected from being spent on long-term care, however, in the end, a lien could be placed on some of those assets in order to help Medicaid recover some of the cost incurred.
Recently, some of our team members attended Indiana's annual Medicaid conference where attorneys and legal professionals from across the state learn about ongoing updates and trends pertaining to Medicaid Planning. This year, Medicaid liens became a topic of discussion as leaders commented that estate recovery could become more common in the near future.
Can this be true?
Although it may sound strange, Medicaid can place a lien on some assets of an estate if the decedent was receiving benefits prior to their passing. When an individual becomes eligible for Medicaid, federal law requires that the state send the individual a written notice describing the rights of the state to recover Medicaid-paid medical costs following the individual's death. The federal government established a policy that requires states to try and recoup some of the costs paid out for those who received certain types of Medicaid benefits during their lifetime. And although this may not have been a well-known move in the past, Medicaid may be poised to start taking its share from future estates.
“Medicaid Estate Recovery is the process by which the State of Indiana seeks to recover amounts paid by Medicaid on behalf of a qualified individual. When a Medicaid recipient dies, the State of Indiana is required by federal and state law to seek recovery from their estate funds equal to the amount used to pay for their medical expenses. Any funds recovered through the estate recovery process are then used to help provide for future Medicaid recipients.” — WWW.IN.GOV/FSSA
What should I do if I suspect an estate recovery?
To determine if your estate or the estate of a loved one might be at risk for Medicaid recovery, you'll need to retain legal help. Defining "estate" varies from state to state and therein lies the variance with Medicaid's recovery process. In Indiana, for the purpose of Medicaid Estate Recovery, an estate "consists of the assets and property owned by the Medicaid recipient at the time of his or her death. This includes all real and personal property included within the Medicaid recipient's probate estate. The term estate also includes “nonprobate assets,” which is any real and personal property that is conveyed through a “nonprobate transfer," according to the in.gov website.
It may be helpful to read through some of the state's informational material found at https://www.in.gov/fssa/ompp/4874.htm. In the meantime, it is important to understand that the dos and donts of qualifying and maintaining Medicaid benefits don't end upon approval. Ongoing asset management may be needed. Annual redeterminations are critical to retain coverage, and failure to provide timely notice to Medicaid, should your situation or circumstances change, can be cause for coverage loss. Even after a loved one's passing, Medicaid benefits and aspects of their eligibility are still vital.
While this all may seem a bit overwhelming, the good news is that you don't have to go through it alone. Elder Law and Medicaid Planning attorneys are specialized in knowing the nuances of these programs and requirements. When planning accordingly, families should be advised on the long-term impact planning strategies may have on their loved one's estate. The goal isn't to simply gain benefits for long-term care, but to create a long-term strategy that benefits the client's bigger picture.