Will Medicaid Come after My Mom’s Estate?

McNair Dallas Law

Medicaid Estate Recovery Program

Both of my parents entered a facility on Medicaid in January 2020. My dad passed two months later. Their home was sold in December 2020. My mom has been in rehab since a fall. When would the estate recovery begin? It’s confusing.

Many people have heard that a home can be exempt from the asset calculations for Medicaid Qualification, but they are concerned that the Medicaid Estate Recovery Program (MERP) will later claim the home to recoup some of the cost of long term care.  It can be very confusing when the estate recovery process begins with Medicaid, says nj.com’s recent article entitled “When will Medicaid recover funds from this estate?”

Under federal and state laws, the state Medicaid program is required to recover funds from the estates of Medicaid recipients who were 55 years of age or older at the time they received Medicaid benefits. This can be nursing facility services, home and community-based services and related hospital and prescription drug services. States have the option to recover payments for all other Medicaid services provided to these individuals, except Medicare cost-sharing paid on behalf of Medicare Savings Program beneficiaries.

In some situations, the money left in a trust after a Medicaid enrollee has passed away, may also be used to reimburse Medicaid. However, states can’t recover from the estate of a deceased Medicaid enrollee who’s survived by a spouse, child under age 21, or blind or disabled child of any age. States also must establish procedures for waiving estate recovery, when recovery would cause an undue hardship.

States may also impose liens for Medicaid benefits incorrectly paid pursuant to a court judgment.

States can impose liens on real property during the lifetime of a Medicaid enrollee who’s permanently institutionalized, except when one of the following individuals resides in the home:

  • a spouse
  • a child under age 21
  • a blind or disabled child of any age; or
  • a sibling who has an equity interest in the home.

States must remove the lien, when the Medicaid enrollee is discharged from the facility and returns home.

Note that any property that belonged to the deceased Medicaid recipient at the time of their death is subject to estate recovery, even when that property was owned jointly or individually.

Therefore, Medicaid postpones estate recovery, if there is a surviving spouse or a surviving child who is under the age of 21, or is blind or permanently and totally disabled in accordance with the Social Security definition of disability.

The State of Texas is less aggressive than other states in pursuing Medicaid Estate Recovery Claims.  They have classified MERP claims as “Class 7” meaning that they are paid after funeral bills, administration expenses, child support, taxes and other expenses.  For more details about Texas MERP, see DADS 121 MERP or contact an experienced Elder Law Attorney.

Reference: nj.com (May 26, 2021) “When will Medicaid recover funds from this estate?”

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