For those who may be facing long term care in the near future, you need to understand how the Medical Assistance Estate Recovery Program works.  Medical Assistance pays for both nursing home care and for caregivers in your home.   You need to qualify financially for the Medical Assistance Program.  If you do, you will receive substantial benefits that help cover the cost of your care.

The Department of Human Services has the obligation to recover Medical Assistance long term care costs for recipients over the age of 55.    To be subject to the Estate Recovery Program, you need to have received nursing facility care or home and community-based services along with any related hospital care and prescription drug services.

With few exceptions, the Department’s claim is limited to the estate of the deceased individual.  The estate is comprised of assets that are solely titled in the name of the deceased.  Since those eligible for Medical Assistance have to spend down their liquid savings (cash, investments, bonds, etc.), the recovered amounts tend to be small in value.  The Department does not pursue money that passes outside of the estate, such as jointly owned property or life insurance proceeds not payable to the estate.

However, the home is one of those assets that could be exposed to the Estate Recovery claim.  The home is an exempt asset under the Medical Assistance program.  It is not required to be sold in order to become eligible for the Program.  However, if it is in the estate of the person who received benefits, it will be subject to the claim of the Department.

The personal representative of the estate, such as the executor, must notify the Department that a person who received Medical Assistance has died.   The Department will then send notice and the amount of the Estate Recovery claim within 45 days.   That claim serves as a debt of the estate that must be satisfied after burial, any family exemption and administrative expenses are paid.   The claim of the Department has priority over the beneficiaries named in the Will.  The beneficiaries will need to satisfy the claim if they want to preserve the home.

It is therefore prudent to retitle the home prior to receiving Medical Assistance.  The home is often moved into the name of the spouse who is not going to receive Medical Assistance.  Currently, the Department does not place a Medical Assistance claim on the home if it is owned by the surviving spouse who did not receive Medical Assistance benefits.   Many couples attempt to move the home out of their name altogether at least five (5) years prior to receiving benefits.  The home can be transferred to an Asset Protection Trust that will protect the home from any Estate Recovery claims.

There are various exceptions to the Department’s claim, including for those who paid certain expenses of the vacant home as well as for a caregiver child who resided in the home for two (2) years prior to the owner of the home receiving Medical Assistance benefits and has no other residence.

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