New Jersey expanded Medicaid under the Affordable Care Act, (ACA, also called Obamacare) causing terrific health coverage gains for its residents. One unfortunate byproduct of Medicaid expansion is Estate Recovery, which can be assessed against any Medicaid recipient over the age of 55. The purpose of estate recovery is to reimburse the State for Medicaid benefits provided, and typically the recovery is against assets that were excluded from consideration during the beneficiary’s lifetime (such as a residence)
For MLTSS recipients, the recovery is limited to nursing home or home and community-based services (HCBS) and ancillary services, but for ACA Medicaid recipients, all services, including hospital and doctor coverage, could be recoverable. The lien is placed against the assets in the estate of the deceased Medicaid recipient. The Executor of the Estate would need to pay back the lien from estate assets before distributing the remainder to the heirs of the deceased person. This can create an encumbrance against real property, for example.
Sen. Cryan has proposed a bill to conform ACA Medicaid Estate Recovery to MLTSS Estate Recovery. This is a welcome revision. People age 55 or older looking for coverage won’t have to think twice about being Medicaid eligible and using Medicaid for their basic healthcare needs. The New Jersey Chapter of the National Academy of Elder Law a Attorneys (NAELA) wrote in support of this bill and we look forward to its passage.
If this legislation is of interest to you, contact your legislators.
For legal advice concerning estate administration and problems with Medicaid liens, call us at 732-382-6070
The Medicaid program determines eligibility for a married applicant based on the amount of resources owned by the applicant and his spouse. If the community spouse dies first, the program will count as a resource the amount of assets that the surviving spouse is entitled to receive from the Estate to satisfy his claim for the “elective share.” If the individual fails to pursue his claim for the “elective share,” he may receive a transfer penalty for “giving away” the assets he should have received from the Estate. Alternatively, he may be deemed to have owned the amount of resources that he failed to seek. Also, the State imposes a lien against the estate of a deceased Medicaid beneficiary, and the lien attaches to all resources in which the individual had an interest at the time of death. One of the exceptions to having the right to claim an elective share is if the couple were living separate and apart at the time of the death under circumstances giving the deceased grounds for divorce.
The New Jersey Appellate Division has issued an opinion that examines many aspects of the claim for an elective share. Here is a pdf: Estate of Brown elective share case 2017. Arthur Brown was married to Mary Brown. Arthur developed Alzheimers Disease and moved into Assisted Living. later he needed to move into a nursing home. He transferred his interest in the marital residence and other assets to his wife Mary and successfully applied for Medicaid benefits, which began in 2008. In 2010, Mary died, but Arthur did not claim the elective share and received no distribution from his wife’s Estate. The County Board of Social Services notified Arthur that it would impose a “transfer of assets penalty” on him and would discontinue benefits. One of Arthur’s positions was that at the time Mary died, they were living separate and apart and she would have had grounds for divorce due to his Alzheimers Disease. He pursued his appeals, and elected to have his Medicaid benefits continue during the appeal process. Arthur died in 2013 before the appeals were concluded. The State then imposed its lien, asserting that the amount of resources which would have comprised the elective share was subject to lien. That led to this case decision.
The case provides a detailed review of both the Medicaid lien statute as well as the issues involved with determining when the elective share applies. In particular, the Court held that there was no evidence that the marital relationship was disrupted or that either party had intended to seek divorce or initiated a complaint for divorce. Although the two of them had different residences, the presence of advanced Alzheimers Disease was not seen by the Court as proof in and of itself that grounds for divorce existed, so the Court agreed with the trial court Judge that allowing the exception to apply would create a broad risk that certain surviving spouses would be left with no support.
Every case is specific to its facts. Call us for advice on elective share claims and other Medicaid eligibility issues …….. 732-382-6070
On March 24th, PBS news hour had a segment called “The Medicaid Bill that doesn’t go away when you die.” www.pbs.org. The program described the impact of estate recovery liens which are pursued by State Medicaid Programs. Estate recovery is required by federal law in 42 USC 1396p. The New Jersey lien statute is at N.J.S.A. 30:4D-7.2(a)(2). The lien is imposed after death against property that was owned by a Medicaid recipient at the time of his death. Congress allows States to go after not just the solely-owned “probate assets,” but any asset in which the Medicaid recipient held any legal or equitable title at time of death, such as jointly-held assets that otherwise pass to a surviving co-owner. this is called the “expanded estate.”
We just handled an estate of someone. who died many years ago owning a property that just never got sold until 2014. Her many heirs were hopeful for some inheritance. We contacted the State Medicaid office, as the Executor had no idea whether the deceased had been on Medicaid or not. It turned out she had received Medicaid benefits after age 55 which, in the last year alone, exceeded the total value of the property that remained in her estate. The lien recovers for ALL Medicaid services provided after age 55.
Careful planning can avoid Medicaid liens, but failure to plan could be a recipe for the heirs’ losses later.
Call us for advice and representation concerning Medicaid issues, applications and appeals … 732-382-6070
As explained yesterday, the NJ State Medicaid Program cannot assert a lien against the Medicaid recipient’s property during his lifetime, unless the individual had wrongfully received benefits and the State sued and obtained a judgment. In all other cases, a lien can only be asserted after the death of a Medicaid beneficiary, and certain conditions must apply: the Medicaid recipient had to have an ownership interest in the asset at the time of death, and there must be no surviving spouse, no surviving child who is blind, disabled or minor, and no surviving sibling co-owner who resides in the premises. 42 USC 1396p(a)(1), N.J.S.A. 30:4D-7.2(a)(1), and N.J.A.C. 10:49-14.1(n)(1). The lien is limited to the lesser of the amount of the services that were provided or the date-of-death value of the individual’s interest in the property. Estate Recovery Medcom
After the death of a married Medicaid beneficiary, there can be estate recovery after the death of their community spouse with respect to assets that were jointly owned by both spouses or were “unavailable assets” that were owned by the Medicaid beneficiary at the time of their death. New Jersey adopted the “expanded estate” definition, so even non-probate assets can be reached if they were still owned by the Medicaid beneficiary at the time of death – jointly held assets and assets with beneficiary designations on them are the main types. So for instance if a person is incapacitated and has no power of attorney in place, he may begin receiving benefits because all of his assets are inaccessible. If he then dies, there will be a Medicaid lien against the estate unless the exceptions above apply to the situation.
Careful planning can prevent a crisis, and careful planning can avoid the imposition of a Medicaid lien.
Call us regarding Medicaid eligibility planning and appeals …