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Chapter 13. Medicaid > Estate Recovery

Estate Recovery

Although the home of a Medicaid recipient is not a disqualifying asset in the determination of Medicaid eligibility, if the home is owned by the Medicaid recipient, the state will have a lien upon it, giving the state a claim at the death of the Medicaid recipient or, if there was a community spouse, at the death of the community spouse, whichever event occurs last. Through this claim, the state has a right to be reimbursed for everything it has paid for the long-term care in a nursing home of the Medicaid recipient. Since generally the only asset of any value in the estate of a Medicaid recipient is the home, the state recovery program effectively allows the state, in many instances, to require that the home be sold to reimburse the state for money advanced through Medicaid for the long-term care of its former owner.

In many states this claim is limited to only assets that are held in the probate estate of the Medicaid recipient, which means that if the home was held in a life estate or jointly with the community spouse and the community spouse survived the spouse in the nursing home, the state’s lien would be extinguished forever. However, federal law permits individual states to make their own laws to extend the property to which the claim will apply to include property held in a life estate or joint ownership. Since 1993, the federal government has required the individual states to recover funds expended for Medicaid recipients from whatever may be in the probate estates of those recipients. At various times Georgia, Michigan, Texas and West Virginia have all refused, in open contempt of the federal law, to seek reimbursement through the sale of the homes of deceased Medicaid recipients. West Virginia sought unsuccessfully in its own defense to have the estate recovery law declared unconstitutional. It has appealed this decision but stands little chance of ultimate success. Proper planning as outlined throughout this chapter can help you avoid this situation.


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