If you have a loved one that receives Medicaid or if you have a loved one who needs special care, how you structure their finances is critical to ensuring that your loved one receives of the resources available to them. In some cases, the state may try to recoup the cost of Medicaid benefits from a beneficiary’s estate. Fortunately, how you structure your loved one’s finances can protect them and protect your entire family. Here’s what you need to know about Medicaid Estate Recovery:
What is Medicaid Estate Recovery?
Medicaid estate recovery is a process that the state can use in order to seize assets from the estate of a Medicaid recipient. When a person receives Medicaid, the state may try to recoup the costs of their care from the person’s estate. When a qualifying Medicaid recipient passes away, the state may look to the items in their estate in order to provide reimbursement for Medicaid payments made during the person’s lifetime.
Why does Medicaid Estate Recovery matter if a loved one receives Medicaid?
If you have a loved one who receives Medicaid benefits, Medicaid Estate Recovery matters because it may impact your loved one’s estate distribution. When the Medicaid recipient has an estate, the process of Medicaid Estate Recovery may prevent them from leaving the estate to their heirs. Estate planning is critically important for all Medicaid recipients in order to structure the estate both to receive Medicaid benefits and leave their estate to their heirs.
How does Medicaid Estate Recovery work?
Medicaid Estate Recovery works by looking at the Medicaid recipient’s estate after they pass away. If a person has items in their estate like real property, bank accounts or even personal property, state agents may try to seize those assets from the person’s estate. The process may stop heirs of the Medicaid recipient from receiving a distribution from the recipient’s estate.
What types of assets are subject to seizure in Medicaid Estate Recovery?
Medicaid Estate Recovery may apply to any items in a person’s estate including:
- Real property, including the recipient’s home
- Vehicles, including primary vehicles, motorcycles or recreational vehicles
- Home furnishings like furniture and electronics
- Personal items of value
- Bank accounts
Any asset may be subject to seizure. However, there may be exceptions and ways to structure resources in order to prevent Medicaid agents from attempting to seize the assets.
When does Medicaid Estate Recovery apply?
There are two circumstances where Medicaid Estate Recovery applies. First, when a Medicaid recipient is over age 55, the estate recovery process applies.
Second, anyone who is permanently institutionalized who gets Medicaid at any age is subject to the recovery program. Because Medicaid is a program for lower-income and disabled people, there are many people who do not leave assets that are subject to seizure. However, special needs Medicaid recipients may structure their resources in a way that both allows them to receive Medicaid and protect their resources.
Protecting the family home from Medicaid Estate Recovery
For surviving family members, Medicaid Estate Recovery may create doubt surrounding the family home. If there is a spouse or child living in the home, it’s important to protect the home from seizure. You can work with your Medicaid planning attorney in order to structure your finances in a way that prevents seizure. For example, it may make sense for a trust to hold title to the home, or it may make more sense to have a family member hold title to the home.
There are some exceptions in the home seizure laws for family members. Although a home falls under estate recovery laws if it is owned as tenants by the entirety, you may be able to secure an exception if you are the surviving spouse and still living in the home. Children under 21 may also qualify for an exception. There is also a generic exception that covers situations creating an undue hardship.
The best option is to carefully plan the estate of the loved one as soon as you realize that they need may special care. Estate planning is not just for the wealthy. In fact, it is especially important if you need to carefully manage limited resources. By carefully structuring your loved one’s assets, you can ensure that they qualify for Medicaid benefits and that their resources survive their estate for distribution to their heirs. The goal of estate planning is to restructure the Medicaid recipient’s assets so that they qualify for Medicaid and so that their assets are exempt from the seizure process.
Where do Medicaid Estate Recovery laws come from?
Medicaid Estate Recovery laws come from both state and federal sources. The U.S. federal government requires each state to have a program for Medicaid Estate Recovery. However, the federal government leaves it up to each state to decide how to implement its program. The rules may vary by state, and a state may change its procedures for recovery over time. For example, North Carolina’s program is administered by the North Carolina Division of Medical Assistance. It’s critical to work with an experienced Medicaid planning attorney in your state in order to ensure that they apply the appropriate law when creating the best estate plan for your loved one.
How can an estate planning attorney help me?
An estate planning attorney can help you manage every aspect of your finances or a loved one’s finances. Estate planning can help you qualify for government programs for you or for your loved one without penalizing you for dutifully saving for the future. Structuring your finances through estate planning helps you keep the money that you save while allowing you to tap the government resources that you depend on for your loved one’s care. If you or a loved one receives Medicaid or has special needs, contact Wilson Ratledge today to talk about your case.