01 Sep Will Medicaid Take Your Home? Understanding Medicaid Estate Recovery
What is Medicaid?
Medicaid is a federal program that provides health coverage for certain low-income individuals, including individuals with disabilities and seniors.
While a federal program, Medicaid is managed by the states and states contribute to the cost of providing Medicaid. Each state’s Medicaid program has different coverage and eligibility requirements. Contact your state Medicaid Agency to see if you are eligible and for details about what it covers in your state.
Medicaid coverage can include medical care, prescriptions drugs, and long-term care, which can be provided at home, in the community, or in a facility such as a nursing home. For more information about Medicaid and how to qualify, watch our webinar on Avoiding Financial Toxicity.
If you receive Medicaid coverage for long-term care services, federal law requires states to recover the cost of providing your long-term care from your estate, after you pass away, including:
- nursing home or other long-term institutional services;
- home- and community-based services;
- hospital and prescription drug services provided while the recipient was receiving nursing facility or home- and community- based services.
In order to recover money from your estate, Medicaid has to go through the probate process, similar to other creditors. Medicaid may also place a lien on your real property (real estate), so that if the property is sold before or after your death, the state will get paid back from those funds.
Generally, your “estate” includes any personal or real property that you own. For the purposes of Medicaid estate recovery, each state defines the term “estate” differently. Before receiving long-term care through Medicaid, you may want to consider talking with an estate planning attorney to understand how it will impact your estate and finances.
Key Details to Know
States can only recover from recipients who were 55 or older at the time of receiving Medicaid benefits, or who (regardless of age) were permanently institutionalized.
There are also exceptions to this rule. For example, your heirs can seek a hardship waiver to avoid estate recovery.
States almost always include the home as recoverable property, but will allow delays or exceptions when heirs, spouses, or siblings continue to reside in or rely upon the home. The hardship waiver criteria detail those exceptions.
States are not allowed to make estate recoveries:
- During the lifetime of the surviving spouse (no matter where he or she lives).
- From a surviving child who is under age 21, or is blind or permanently disabled (according to the SSI/Medicaid definition of “disability”), no matter where he or she lives.
- In the case of the former home of the recipient, when a sibling with an equity interest in the home has lived in the home for at least 1 year immediately before the deceased Medicaid recipient was institutionalized and has lawfully resided in the home continuously since the date of the recipient's admission.
- In the case of the former home of the recipient, when an adult child has lived in the home for at least 2 years immediately before the deceased Medicaid recipient was institutionalized, has lived there continuously since that time, and can establish to the satisfaction of the State that he or she provided care that may have delayed the recipient’s admission to the nursing home or other medical institution.
States tend not to recover on estates when it would not be “cost-effective” to do so.
State laws may provide added rights and benefits to an individual diagnosed with cancer. For access to information on specific laws, visit our chart of state laws.
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