Estate Recovery and Medicaid Liens

“If I go into a nursing home, will the State take my house?” This is a commonly-asked question. The answer is “No, but …” If a person applies for long-term care Medicaid benefits, his available assets have to be below a certain level. The house he owns generally has to be listed for sale (called a “Plan of Liquidation”), but this requirement is waived (or deferred) if there is an immediate family member residing there, such as a spouse or child or sibling. In New Jersey, the State does not place a lien against the property during the Medicaid recipient’s lifetime. Some other States do so; these are referred to as “TEFRA Liens.”  (Social Security Act 42 USC § 1917(a)(1)-(2)). So, if the property is on the market and then is sold, the individual would then lose eligibility for Medicaid benefits until the proceeds of sale have been “spent down.” If the individual dies and still owns the house, the house will be in his/her estate, and federal law requires States to seek recovery from the Estate of the deceased Medicaid beneficiary, for the value of correctly-paid Medicaid services provided after age 55.

Under some circumstances, the State must defer recovery until a later date. The 2016 CMS Coordination of Benefits Handbook in Chapter III.B. provides a succinct explanation of estate recovery starting at page 53. https://www.medicaid.gov/medicaid/eligibility/downloads/tpl-cob/training-and-handbook.pdf

Under federal law, the State Medicaid Agency  (SMA) may only make recoveries from the beneficiary’s estate under the following circumstances:  (a) After the death of the surviving spouse (regardless of where the spouse lives);  (b) When the deceased beneficiary’s children have all reached age 21; (c) after the death of a child of the beneficiary who is blind or disabled, regardless of where the child lives. The State cannot even record a lien against the property while there is still a surviving spouse, child under 21 or blind or disabled child.  In addition, New Jersey has a policy that if another family member was residing in the premises at the time of the death of the institutionalized Medicaid recipient, and continues to reside there, the State will record its lien but will not enforce it until the person moves out or the property is sold. See attached: The_NJ_Medicaid_Program_and_Estate_Recovery_What_You_Should_Know

Very often, transferring ownership of real estate is an important component of nursing home care planning, but there are also circumstances where it just cannot be done, or is not done, before the Medicaid recipient dies. The estate administrator or executor then needs to be aware of the ramifications of the Medicaid lien against the estate’s assets so that the estate administration can be correctly managed.

Call us about Medicaid eligibility planning and estate administration ….. 732-382-6070

Why would an 18-year old need a Power of Attorney or a Will?

Powers of attorney are for old people.” “I don’t need a Will, I don’t own anything!” Truth be told, signing a basic set of ‘estate plan documents” at age 18 can prevent expensive legal problems later. It’s like fire insurance — you get it, but hope you don’t need to use it. I have been in court on so many occasions when an expensive guardianship proceeding was in progress because a young person had had a traumatic medical catastrophe or accident or brain injury but was over 18, had never signed a financial or medical power of attorney,  and no one could lawfully make decisions for them. Lawsuits couldn’t be filed or defended; settlements couldn’t be handled; bank accounts couldn’t be accessed; checks couldn’t be written; medical decisions were held up; bills couldn’t be paid.

What if there is no Last Will and testament? There, too, a person needs a Will so that someone can be appointed as Executor. It could happen that after a death, a lawsuit needs to be filed or other legal problems need to be straightened out. The Will designates the Executor, along with specifying who will receive the assets later. If there is no Will and no Executor, someone must apply at the County Surrogate  for appointment as  administrator, and others may be equally entitled to that appointment. This can cause substantial delays and costs to the estate.

As my children turned eighteen, they signed their basic estate plan. We called it insurance. As your children are becoming adults, consider helping them to make these arrangements also. The result can be peace of mind for everyone involved.

Call us for life cycle planning for young adults ……… 732-382-6070