Imagine you or your spouse are a resident of a nursing home.  After a lot of work, the Medicaid application was approved and the bills are being paid in accordance with your personalized budget. Are there any future consequences to receiving Medicaid?   You may be surprised to learn the answer could be yes. 

Federal law allows a State to place a lien on real property owned by a Medicaid recipient who is an in-patient in a nursing home or other facility and receiving Medicaid coverage for services.  Additionally, there is an automatic lien on future windfalls, inheritances and other legal settlements.  A lien can be paid during the recipient’s life or after death. 

The Medicaid lien is typically calculated by the total amount Medicaid paid for the recipient’s care costs.  When the recipient’s real estate is sold, whether during life or after death, the lien will show up on a title search and will have to be paid off at the closing.  Where the amount of the lien is higher than the proceeds of the sale, a compromise can be arranged with Medicaid to accept less so the sale can happen.  Medicaid can recover any balance in other ways at a later date. The State’s claim will continue to grow for so long as the recipient is receiving benefits,

A Medicaid lien will not be enforced on real estate for so long as recipient’s spouse, children under age 21, or a disabled child live in the home. 

Federal law also allows a State to recover for Medicaid payments against a recipient’s Estate.  The recipient’s family will receive an Estate Questionnaire from third-party vendor “HMS” (Health Management Systems) within a few months of death. The questionnaire is pretty straightforward, inquiring about any assets owned by the recipient at the time of death that will go through an Estate. The recipient’s representative should fill out the questionnaire honestly providing contact information for the Estate’s attorney (if any). HMS will then file a formal claim against the Estate in Surrogate’s Court. This claim will have to be paid as a preferred creditor as part of the estate administration and prior to any distributions of the Estate to family. 

The State’s policy is to not recover or enforce a lien against non-probate assets.  Examples of non-probate assets are assets with a beneficiary or joint owner, which could include life insurance, individual retirement accounts (IRAs), real estate and bank accounts.  There also may be extenuating circumstances that can be used to negotiate a more favorable outcome.

A strong knowledge of the Medicaid law, rules, regulations and policy is important to most effectively deal with Medicaid, not only at the time of application, but also during recertification and after death.  Be sure you have the right professional on your side to help.

Law Office of Kathleen M Toombs PLLC

157 Barrett Street, Schenectady, NY  12305

(518) 688-2846

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