Will Estate Recovery Take My Home When I Die?

Written By: Jeffrey A. Marshall, Esquire, Of Counsel

Most people in nursing homes cannot pay for the full cost of their care. They receive financial help through the government Medicaid program (which is called “Medical Assistance” in Pennsylvania). The Medical Assistance rules do not force you to sell your home (or “turn it over to the nursing home”) as long as you would return home if you could. But, because of the “Estate Recovery” law, your home may have to be sold to repay the government for its outlays when you die.

Usually, Medicaid Estate Recovery focuses on the home. For many older Americans the home constitutes most of their life savings.   Often, it is the only asset that a person has to pass on to his or her children – a legacy that may go well beyond its financial value. The children may have strong emotional attachments to the house where they grew up. And children frequently move back into the home to care for their aging parent. It may be the child’s home as well.

The Home is Exempt During Life

Under the Medical Assistance regulations, the home is an unavailable resource. This means that it is not taken into account when calculating eligibility for nursing facility or home care Medical Assistance benefits. But in 1993, Congress passed a little-debated law that affects hundreds of thousands of families with an elderly parent in a nursing home or receiving Medicaid funding home care benefits. That law requires states to try to recover the value of Medical Assistance payments made to nursing home residents and some home care and prescription drug recipients. This unheralded, but sweeping law attempts, in effect, to change Medical Assistance from a system that provides free long term care to the poor into a loan program.

Estate Recovery Takes Effect at Death

Medical Assistance recovery does not take place until the recipient of benefits dies. Then, Federal law requires that states attempt to recover the benefits that were paid. Recovery must be sought from the recipient’s probate estate. Generally, the probate estate consists of assets that the deceased owned in his or her name alone and without beneficiary designation. The Federal law permits states to go even further and recover from non-probate assets including assets owned jointly or payable to a beneficiary. But in Pennsylvania, recovery is currently limited to the probate estate.

Pennsylvania tracks the deaths of nursing-home residents and others who were receiving help from Medical Assistance with the cost of long term care. It sends notices to family members of the state’s claim. Many homes have been sold are sold to repay the state’s Estate Recovery claim.

Complicated provisions in the estate recovery law can be used to protect for the home for the spouse of the nursing home resident, and for a child who has returned home to care for their parent. And there are a number of other ways to protect your property from the Medical Assistance Recovery Program. But the best planning options are only available before the death of the recipient of benefits. The sooner planning is begun, the better.

Estate Recovery Can be Avoided with Early Planning

Obtaining correct and up-to-date information regarding Medicaid eligibility and estate recovery is challenging. This complicated and ever changing area of law is not an area of practice in which a lawyer should dabble. Eligibility is governed by federal law, federal regulation, state statute, case law, state regulations, and state policy. Sometimes the relevant state policies are unwritten or otherwise unavailable or difficult to ascertain. You should seek assistance from an elder law specialist who keeps up on all the rules. All lawyers are not equal in knowledge in this area of the law.

In addition, Medicaid eligibility determinations are made by non-lawyers of various degrees of training and experience working for the Department of Public Welfare. Although uniformity in implementing the rules is intended, it is rare. In effect, different areas of the state may follow slightly different rules.

As part of Medicaid eligibility planning, an experienced elder law attorney can help protect your home from estate recovery. But its best to plan early – that is when the most options are available. Don’t wait for a crisis to strike if you can avoid it.

For all the above reasons, if you believe that you or a family member may someday need extra help to help pay for care needed due to aging or illness, it is critically important to get expert guidance at the earliest possible time. If you live in the North Central or North East areas of Pennsylvania you can contact Marshall, Parker & Weber. They have been helping families through the Medicaid maze for over 30 years.  Offices are located in Williamsport, Wilkes-Barre, Scranton and Jersey Shore.

Further Reading on Estate Recovery

The Federal Law is found at 42 U.S.C. § 1396p(b). Federal regulatory guidance is available at http://www.cms.hhs.gov/transmittals/downloads/R75SM3.pdf.

Pennsylvania’s estate recovery regulations are available online at http://www.pacode.com/secure/data/055/chapter258/chap258toc.html.

A lot of additional information on Estate Recovery (and how to avoid it) is available on the Marshall, Parker and Associates website at http://www.paelderlaw.com/?s=estate+recovery.

An additional article  about Medicaid Estate Recovery is available here: “Medicaid Estate Recovery – A Medicaid Death Tax.”

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