If Dad Needs Nursing Home Care will the State Take Mom’s House?

It’s a question I get – or some variation of it – probably more often than any other, and it refers to what is called “estate recovery”.  As part of the deal that the states enter into with the federal government before they can get federal funding for their Medicaid programs, each state has to make an effort to recoup, after the Medicaid recipient dies, the money it paid out in benefits.

 The process by which this is done is called estate recovery, and as with most things Medicaid, that process differs greatly state to state.  First, let’s review the basics.  Estate recovery applies only to Medicaid benefits provided for services received after age 55.  The State will not seek immediate recovery as long as there is a surviving spouse or child under age 21, blind or permanently and totally disabled.  The key word is “immediate’.   After the spouse and/or child dies, reaches age 21 or is no longer disabled, as the case may be, the State will then attempt to recover assets from the deceased Medicaid beneficiary’s estate. 

 A common misconception is that the State has a lien when Medicaid starts to pay benefits.  In fact, Medicaid doesn’t place a lien on the home until after death.  It often can take months, or in the case above where there is a surviving spouse or qualifying child, that lien might not be filed for years.

 There are also other scenarios where the State may not seek estate recovery.  Under what is known as a hardship exception, if property in the estate is the sole source of income for one or more survivors and pursuing recovery would likely result in those individuals needing public assistance themselves, then the State may not go after assets.  Also, if a family member was living in the home before the Medicaid beneficiary died, and continues to make it his/her primary residence then the State will record a lien but wait until the property is either sold or the family member dies or moves out, before seeking repayment.

 Those are the basics.  But, you’ve probably got a whole bunch of questions about how the whole process works.  For example, what exactly is counted as part of the ‘estate”?  We’ll tackle that one next week.