After you die, the state is able to seek reimbursement from your estate, bearing in mind that estate could mean simply your probate estate or could have an expanded definition. Call your state Medicaid office if you are unclear about the treatment and standard practice in your state.
The state cannot enforce a lien or attempt estate recovery procedures until after the death of your surviving spouse (if any) and only if you have no surviving children under age 21 (or blind or permanently and totally disabled children). In addition, if a lien on your house already exists, no estate recovery may be made while any one of the following individuals is lawfully residing in your home:
- Your sibling who was residing in the home for a period of one year immediately preceding the date of your institutionalization; or
- Your son or daughter who was residing in the home for a period of at least two years before the date of institutionalization and who provided care to you during that period such that your institutionalization was prevented.
George was a Medicaid recipient who died at age 80 in a nursing home. The state had paid a total of $200,000 in Medicaid benefits on his behalf. George owned a house jointly with his wife, Martha, and Martha continues to reside there. However, George’s state has adopted an expanded definition of estate, which includes jointly owned property.
When George died, the state placed a lien on the family house. The state cannot force a sale of the house while Martha is alive, but when she dies, the state can force a sale of the home and apply one-half of the proceeds toward its recovery of the $200,000 Medicaid benefits it paid to George. Also, the state can collect immediately if Martha decides to sell or refinance the house at any time.
Your assets and funds that are exempt for purposes of determining Medicaid eligibility are not exempt from recovery proceedings. Exempt assets are those that do not affect your eligibility for Medicaid. Each state composes a list of exempt assets, which may include such items as one automobile and household furnishings. Therefore, the state can require the sale of any personal property of the estate to satisfy the Medicaid claim.
Assume George is a Medicaid recipient who dies while living in a nursing home. George owns one automobile (which his family used to visit him), a gold necklace and an expensive watch. After his death, the state is entitled to force a sale of the car and personal effects in order to recover part of the Medicaid benefits paid on George’s behalf over the years.
In states that have long-term care partnership programs, full estate recovery will not apply to individuals who purchase long-term care policies under the program, then qualify for Medicaid once their long-term care benefits run out.
A significant limit on the state’s power to go after assets is that it can only go after assets in your name at death, not assets in your spouse’s name. Also, as mentioned before, the state can only go after nonprobate assets to the extent of your legal interest in such assets at the time of your death. Therefore, if you transfer assets into an irrevocable income-only trust, retaining only the right to receive income from the trust, then the state would be entitled to collect only the present value of your income interest at the moment of your death. If you own a piece of property jointly with someone else, the state (if it adopts the expanded definition of estate) will be able to reach one-half the value of the property.