Medicaid, the federal medical program for low-income individuals and those without sufficient personal resources to pay for care, also funds nursing home and similar long-term care expenses. In 1993, the Estate Recovery Mandate put the onus on the states to develop programs to recover funds from the estates of dead Medicaid recipients, including placement of property liens to satisfy Medicaid debt.
Whose Estates are Affected?
The estates of those receiving Medicaid over age 55 or people of any age who were permanently placed in institutions are subject to state Medicaid recovery. Deceased people whose only state Medicaid benefit was the Medicare Part B cost-sharing for premiums may have their estates exempted, depending on individual state regulations.
Under federal law, states must act to recover the amount received by the deceased from Medicaid for long-term care expenses or hospital and pharmaceutical costs. States cannot recover more money from the decedent's estate than Medicaid paid in funding. Each state has laws regarding the claims of creditors on estates, and recoveries must comply with state regulations. Because of the leeway for recoveries allowed by the federal government on the individual states, collection rates vary widely.
The estates of certain deceased Medicaid recipients may be eligible for hardship waivers under federal law. These include owned dwellings of low value and working farms or businesses, deemed "essential to the support of surviving family members." Home values are determined by the average for the decedent's county. States may impose their own recovery guidelines, granting hardship waivers in situations other than those falling under federal law. Certain states do not pursue recovery if the Medicaid recipient's survivors are very low-income, or may negotiate partial recovery settlements.
No matter the state, Medicaid estate recoveries cannot be made on the home during the lifetime of the recipient's surviving spouse. Recoveries are also prohibited on a dwelling occupied by the surviving children of the deceased Medicaid recipient under age 21 or those with permanent disabilities. A recipient's sibling with partial ownership of the home who lived in the residence a minimum of one year before the deceased entered a long-term care facility and continued to occupy the home during the period of institutionalization is also exempt from recovery. An adult child of the recipient is exempt if living in the dwelling a minimum of two years before the parent's entrance into the nursing home, continuing to occupy the home, and demonstrating proof that the care they gave the parent delayed entrance into the medical facility.