Estate Recovery: A Critical Aspect of Medicaid Planning
Attorneys advising clients on Medicaid planning must be well-versed in their state’s specific qualification rules to help clients secure benefits. Equally important, however, is understanding what Medicaid can do to recover costs from the estates of qualified applicants after they pass away. The aspect of estate recovery is often a significant concern for clients seeking advice from elder law attorneys.
Misinformation from “armchair Medicaid experts” sometimes leads clients to believe that qualifying for Medicaid automatically results in the loss of their home. This misconception can deter people who might otherwise be eligible for benefits from pursuing eligibility. While estate recovery is a crucial consideration, it should not be an automatic deterrent to accessing these essential benefits.
The Estate Recovery Mandate
Before 1992, state Medicaid programs varied widely in their implementation of estate recovery or lien programs. However, the passage of the Omnibus Budget and Reconciliation Act of 1993 (OBRA 93) changed that by requiring states to establish Medicaid estate recovery programs. This law mandates that states recover costs for medical assistance, including nursing home care and other long-term care services.
States have implemented these programs with varying levels of rigor. At a minimum, states must pursue claims through probate estates, but some states have expanded their rules to allow recovery from any asset in which the Medicaid recipient had an interest at the time of death.
Widespread Confusion
Given the diverse rules across states and the complexity of these regulations, it’s no surprise that clients often approach elder law attorneys with inaccurate information. For instance, while a home is generally considered a non-countable asset for long-term care Medicaid qualification purposes, clients may mistakenly believe that no further planning is necessary. However, for estate recovery purposes, the home could be at risk unless it’s transferred to a revocable trust—or, in some states, an irrevocable trust may be required to protect the family home.
Every elder law attorney must understand how their state handles these rules and what strategies can be employed to safeguard their clients’ assets from estate recovery.
Jim is responsible for creating, curating, and promoting high-quality content related to the estate planning and elder law industry. He also plays a primary role in designing and maintaining a robust education and content calendar for Attorney Access.
