Medicaid offers valuable resources to seniors needing long-term care. Asset planning allows you to retain some assets while receiving care. However, that does not mean these assets will always be safe. Many families don’t realize estate recovery might step in later to claim some assets. This post explores Medicaid Estate Recovery and what it may mean for your family’s inheritance.
Medicaid Estate Recovery and Family Inheritance
Retaining some assets while eligible for Medicaid coverage may be advantageous while alive. However, the state may try to recover some of your Medicaid expenses after you die. Under federal law, states must attempt to recover expenditures for nursing home care, home and community-based services, and some medical costs. Once the recipient dies, the state may file a claim against the estate as part of the recovery process. That may give Medicaid priority over heirs when it comes to specific assets.
How Estate Recovery Works
When a Medicaid recipient dies, the state may file a claim against their estate to recover Medicaid’s funds. With Medicaid Estate Recovery, the claim is typically part of the probate process for the decedent’s estate. However, some expenses may also take priority over estate recovery. For example, the estate can typically pay some debts and funeral expenses before Medicaid can claim assets. The rules vary in different states, and there may be exceptions in some circumstances.
Assets Subject to Recovery
In most cases, estate recovery only applies to probate assets solely in the individual’s name. However, there may be circumstances when it touches joint assets. Common assets subject to recovery include real estate, bank accounts, and personal property. However, it’s possible to protect some assets from estate recovery. For example, some life insurance policies and assets in irrevocable trusts may not count. Some states also have expanded recovery. In these states, Medicaid Estate Recovery may go after assets outside probate.
Impact on Heirs and Inheritance
Estate recovery can significantly impact heirs and their inheritance. If the state files a claim, you may need to sell assets from the deceased’s estate to repay Medicaid. That can be especially distressing if you were unaware of recovery or depending on the inheritance. However, some exceptions and hardship waivers may allow heirs to retain some assets.
Exceptions and Deferrals
Situations exist where Medicaid might not claim all the assets it otherwise could. For example, it will not recover from an estate if there is a surviving spouse, disabled child, or child under 21. However, that may mean that estate recovery will occur later. Some states may also allow hardship waivers if recovery would cause an undue financial burden for an heir. These rules vary significantly by state and circumstance, so legal advice is essential.
Planning can help families protect assets from estate recovery. Tools like life estate deeds, irrevocable trusts, gifting assets, and caregiver agreements can assist families in protecting assets. These are complex legal matters, so seniors should consult lawyers to ensure protection while retaining Medicaid eligibility.
Do you need help with Medicaid asset protection or estate planning? Contact the team from the Scott Law Offices. Our elder law experts can help you develop a plan to provide maximum protection for your assets. Reach out now to learn more!
