Medical Assistance’s Estate Recovery Program

Many individuals find that they are unable to afford nursing home care, hospital care, prescription drugs, and home and community based services as they age. This is a sad, but very common occurrence in today’s world. The only option for many is to use Medical Assistance to help pay for the above-listed benefits. The receipt of these benefits comes at a cost for many.

If an individual who is 55 or over and receives Medical Assistance benefits for nursing home care, hospital care, prescription drugs, and home and community based services, their estate will be required to reimburse the Medical Assistance program after the individual’s death. This situation often arises when an older individual does not have many liquid assets and needs Medical Assistance to help pay for nursing home care at the end of their life. When the individual passes away, their estate will then have to re-pay the Department of Public Welfare. All of a decedent’s (the receipient of the benefits) property is subject to the Estate Recovery program, but the recovery only takes place after the person who received Medical Assistance has died.

There are some important exceptions to the recovery program, a few of which will be discussed. If property passes to a surviving spouse outside of the estate, then there is no recovery. For example, if a married couple owns a home as tenants by the entirety or as joint tenants with rights of survivorship, that property is not part of the decedent’s estate and is therefore not subject to recovery. Insurance policies and trust properties also fall outside of an estate.

Another instance when there is no recovery is when an individual dies and leaves an adult child who is blind or totally and permanently disabled, recovery is postponed until that adult child dies. If the individual dies leaving a child under the age of twenty-one, then recovery occurs after that child reaches the age of twenty-one.

In an effort to preserve assets at the end of life, some individuals will transfer or give away property in an effort to avoid the Medical Assistance recovery program; however, the law limits this practice. If property is transferred to a relative or another, they must pay fair market value for it. If they do not pay fair market value, the person receiving the property will be responsible to pay the Department of Public Welfare’s claim.

In an effort to preserve as much of your estate as possible, it is best to try to plan ahead. Please contact us for assistance.

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Filed under Social Security, Wills and Estates

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