The posts in this blog series have focused on Medicaid eligibility criteria, important concepts, and planning options. The final post for this series addresses Medicaid estate recovery.
Beginning January 1, 1995, Ohio implemented the Medicaid estate recovery program, which is mandated by federal law. The Medicaid estate recovery program seeks repayment from the individual’s assets for the medical expenses paid on his or her behalf.
Who is subject to estate recovery?
Any individual who received nursing home Medicaid benefits (at any age), or any other Medicaid benefits after age 55, is subject to Medicaid estate recovery at death.
When does estate recovery occur?
In most cases, the estate recovery process begins after the individual’s death. However, no recovery can be made while the surviving spouse, a child under the age of 21, or a blind or disabled child of any age are alive.
Additionally, if the individual owned a home at his or her death, no recovery can be made from the home if either of the following are living in the home:
Further, no lien can be placed on the home if the spouse, child under age 21, blind or disabled child, or a sibling who had an equity interest in the home and resided in the home at least one year prior to the individual’s death, currently live in the home.
What property is subject to estate recovery?
Estate recovery applies to all real and personal property owned by the individual, including any assets in which the individual had legal title or interest at the time of his death. Even if assets avoid probate and pass through a beneficiary designation, survivorship designation, life estate, or a trust, the State can recover against whatever interest the individual had a moment before death.
What is the recovery process?
When an individual qualifies for Medicaid, the Ohio Department of Medicaid maintains a tracking file. The file is an ongoing record of all services provided to the individual for which Medicaid has paid. When the individual dies, the Department transfers the file to the Attorney’s General’s office, Collection Enforcement Section.
Many times, the Attorney General’s office sends a notice to the last-known address of the recipient asking for general information about next of kin or responsible parties. Further communication from the Attorney General’s office will identify the amount of the claim.
Aside from the information transmitted by the Department of Medicaid, the Executor or Administrator of the individual’s probate estate has a duty to provide notice to the Attorney General’s office. The notice must include an inventory of all probate and non-probate assets of the individual. The Attorney General’s office will then submit a claim within the probate estate. When a surviving spouse of a Medicaid recipient dies, the spouse’s Executor or Administrator has the same duty to provide this notice (because of the delayed claim when there is a surviving spouse).
Additionally, if real property passes to another individual via a survivorship deed or a transfer on death designation, the recipient is required to provide notice to the Attorney General’s office at the time of the transfer.
The State has 90 days from the receipt of the notice or one year after the individual’s death (whichever is later) to make a claim in the probate estate. If these notices are not provided to the Attorney General’s office, the statute of limitations on the State’s claim does not begin to run.
Paying the Claim
Most often, the Attorney General’s office engages local attorneys to be Special Counsel for estate recovery purposes. The person responsible to pay the claim to the State will work with the local attorney to provide information and make payment on the claim.
The individual’s probate assets will be used to satisfy the State’s claim. If assets passed to a beneficiary outside of probate, the individual may be required to use some or all of those assets to pay the State’s claim. If real estate is involved, the Attorney General’s office or Special Counsel may place a lien on the property.
Depending on the situation, the individual’s beneficiaries and heirs may have an interest in protecting some assets, especially if real estate is involved. Although not guaranteed, it may be possible to settle the claim with the Attorney General’s office or Special Counsel.
Medicaid estate recovery can be a challenging process for the individual’s family. In addition to dealing with grief, funeral arrangements, and other matters after the individual’s death, there may be a lurking medical claim. Probate and Medicaid attorneys are much more familiar with the estate recovery process and have most likely gone through the process before. It may be helpful to you and your family to seek the advice and guidance of a professional with experience in this area.