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THE A-B-C's of Medicaid Eligibility - Part 3: Liens & Estate Recovery

medicaid-education-health_resized.jpgThis is part three in our series on Medicaid Eligibility. Part one spelled out the difference between Medicare and Medicaid. Part two looked at asset rules. Here we will discuss liens and estate recovery.

LIENS AND ESTATE RECOVERY

The state has the right to recover whatever benefits it paid for the care of the Medicaid recipient from his or her probate estate. Given the rules for Medicaid eligibility, the only property of substantial value that a Medicaid recipient is likely to own at death is his or her home. Under current law, the state may make a claim against the decedent's home only if it is in his or her probate estate. Property that is jointly owned, in a life estate, or in a trust, is not included in the probate estate and thus escapes estate recovery. The law also provides exceptions to estate recovery when hardship can be proven and will delay estate recovery if a surviving spouse or other dependent is living in the house.

While estate recovery occurs only at death, during life, MassHealth will place a lien on the home of a Medicaid beneficiary living in a nursing home unless certain relatives are living there. These include a spouse, a child under age 21, a blind or disabled child, and a sibling who lived in the house for at least a year before the owner moved to a nursing home. If a lien is placed on the house and the house is sold during the Medicaid beneficiary's life, then MassHealth will have a claim against the proceeds of the sale up to the amount it has already paid for the beneficiary's care. Since the balance of the proceeds will constitute a countable asset, they will render the owner ineligible for Medicaid until such funds are spent down.

When applying, the agency gives a certain amount of time to purchase "non-countable" items such as a funeral plan or a burial plot, among other things. In this context, it might be applied to Nursing Home Fees. This is still a benefit, because paying back MassHealth is still going to cost less than private nursing home fees.

The next installment in this series will explain the treatment of income and Minimum Monthly Maintenance Needs Allowance (MMNA), as well as protections for the spouse of a nursing home resident.

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