This article is not intended to provide you with legal advice. Should you seek legal advice, please consult an attorney. KTS would gladly recommend an attorney should you need one. It’s important to have an attorney take appropriate actions on your behalf and to avoid issues that may be discussed in this article.

In short, if you receive Medicaid long term care benefits from the State of New York, they can claim your property after death. It’s actually a common practice although many benefit recipients may not be aware of the program.

The state is required under Federal law, Social Services Law (SSL) Section 369, to recoup payments to Medicaid recipients 55 years and older. This also includes recovering payments made for institutionalized care (assisted living) under the Medicaid program. Whichever one of these two situations occurs first (55+ or inpatient care) would mark the beginning of what needs to be recovered.

Many older adults who qualify for Medicaid have to spend down their assets to cover their care. Medicaid eligibility requirements are very clear about what is needed to qualify and receive benefits for long-term care costs.

As a Medicaid beneficiary, you are required to spend everything you have (income and assets) on your long term care needs. However, you may still keep your home, and doing so will not prevent you from receiving needed benefits. Sometimes, elderly, who may be expected to return home at some point, are wise to maintain ownership.

Seizing your assets and real property.

But upon your death, the state will step in to recover whatever they can from your estate. Recovery can include seizing your bank account or other liquid assets to help recoup benefits paid for long-term care services. A recent article in US News reviews a number of cases in which states sought recovery of long-term care costs of recently deceased parents, from their surviving children.

A lien or property sale by the state will ensure payment for benefits paid to you while you were alive. This includes your home (real estate) that you own. Such actions would take place during the administration of your estate process. These procedures could, in some cases, also extend to those who may have received assets from the estate.

Delaying the estate recovery process.

Recovery by the state could be deferred in spite of a lien on the property. This deferral could include a survivor/heir legally residing in the home prior to the Medicaid recipient’s death and don’t want to sell. In addition, unless the property is sold, the Medicaid claim can’t be paid in full.

If survivor/heirs can demonstrate the inability to get financing to pay the estate claim, recovery may be delayed. This is also true if survivors/heirs agree to pay Medicaid the claim amount within a reasonable payment schedule and reasonable interest.

Assets included in the state Medicaid recovery program.

So, what exactly may be included in Medicaid’s estate recovery program? In this case, under 18 NYCRR 360-7.11, the estate of an individual includes whatever you have a legal title to at the time of death.

This also includes anything that you have an ownership interest in upon death. The list includes real property such as your home, land, buildings, and any personal belongings/property. In addition, it includes your other assets that are passed on to your heirs, whether or not you have a will.

Regarding an individual’s interest, your estate would include assets conveyed to your survivor or heirs. This would also include anything assigned through survivorship, joint tenancy, tenancy in common, living trust, life estate, or other such arrangements.

Any jointly owned accounts with financial institutions, life estate interests, jointly held real estate property, interest in certain annuities, and trusts would also apply. This is regardless of whether or not there is a right of survivorship or a named beneficiary.

When is recouping Medicaid benefits not allowed?

Are there any situations in which this recovery law is not allowed? There are some situations that do prevent actions from being taken by the state. These would include surviving dependent family members such as your spouse, disabled or blind children.

If your spouse, for example, is still alive, no action would be taken until their death. In addition, any resources, income, and property that belongs to an Alaskan Native or American Indian is not allowed as detailed in 02 OMM/ADM-3.

As mentioned previously, there are situations that may qualify for what is called “deferred recovery.” Minor children who live in the home qualify and would therefore defer any recovery against your home.

Other instances of deferred recovery include an adult child who resided in the home at least two years immediately before the recipient was moved to long-term care. In this case, your adult child would have provided care that may have delayed the need to be institutionalized. In addition, they would have needed to lawfully reside in your home on a continuous basis. Recovery, in this situation, can only take place if your adult child no longer lives in the home or if it’s sold.

If you had joint ownership rights with a sibling who shares the home, the state may delay recovery. In addition, in cases of undue hardship, the recovery of your estate may be delayed.

Does Medicaid ever waive this program?

Are there any instances when Medicaid estate recovery can be waived? Waiving this type of estate recovery may be requested by your surviving heirs or beneficiaries in cases of undue hardship. Such requests would need to be made within 30 days of a Medicaid estate claim notification.

What constitutes undue hardship? When your asset is the only form of income such as a family business and such income is limited, undue hardship may exist. Other considerations would be if the property is the primary residence of the beneficiary and is of modest value. Modest value is determined if, at the time of death, the real property’s value is no higher than 50% of average selling prices within the home/property’s county where it’s located.

There may be other situations due to undue hardship that the state may consider in waiving recovery. However, there are instances when the claim of undue hardship does not result in waiving estate recovery. For example, a beneficiary may claim they are no longer able to maintain a certain type of pre-existing lifestyle. Such a case has been consistently determined not to be among the circumstances in which recovery is waived.

The cost of long-term care could be your home.

Learning about this recovery law for the first time may be disturbing to many elderly people hoping to leave something for family members when they die. For example, if recovery is not waived, it may thwart plans for many seniors planning to leave their homes to their loved ones. For this reason, you may want to consider protecting your assets through early estate planning and asset protection.

About the Author, Carlos Nath:

Carlos Nath is the Senior Trust Advisor with KTS Pooled Trust. As a seasoned professional with over five years of experience in the New York pooled trust space, Carlos has helped thousands to enroll and set up their accounts with KTS. He is proficient in understanding the Medicaid process and provides assistance in clarifying what clients may need. Previously, Carlos worked with a Medicaid consulting firm as an advisor who helped clients who were seeking Medicaid and pooled trust assistance.