Although Medicaid is basically a Federal program, it is administered by each state separately and funded by both the state and Federal Government. Therefore, each state is entitled to enact its own rules and regulations regarding the administration of the Medicaid system, and this also includes recovery.
Medicaid recovery is a program by which, if a person dies and had assets that were otherwise inaccessible or non-countable, upon death, the state Medicaid department may have a right to recover the funds up to the amount the Medicaid program expended. Some states claim assets only against probate assets of the Medicaid recipient upon death, whereas other states have a program called expanded recovery, which means they may reclaim assets which are probateable or not probateable.
A recent case indicates the need to maintain a plan even after a Medicaid applicant has been approved for medical assistance. In this Minnesota case, a husband was institutionalized on a permanent basis and qualified for Medicaid. Many of the assets, including the house, were owned jointly at the time of the application and approval. Subsequent to the approval, the community spouse (wife,) who was living in the home, transferred some of the assets to herself and her children.
The husband subsequently died, and the wife died several months thereafter. The state attempted to collect funds that it paid on behalf of the husband’s Medicaid claims from the wife’s estate. Her Estate contested the matter, and the highest court in the state, the Minnesota Supreme Court, heard the case upon appeal.
The decision handed down from the court was such that the substantial amount of the claim by the state was unable to be claimed from the surviving spouse’s estate. The court found that the surviving spouse had effectively and legally transferred her interest before she died, thus precluding recovery from her estate. Therefore, it determined that there was no basis from the Medicaid department to establish any claim against the estate, since the wife died and had not been on Medicaid.
The effectiveness of the planning was evident in that if the wife had predeceased her husband, her interest in the property would have reverted back to him, which would have either thrown him off Medicaid or allowed him to remain on Medicaid, but upon his death, Medicaid would have been able to recoup all the funds against his properties. In addition, the wife, the community spouse, had taken the necessary steps to protect assets so that if she had been institutionalized, there would not have been the significant amount of assets that she would have had to expend for her long term care expenses, as well as preventing the state from recouping any recovery against her estate.
By: Hyman G. Darling, Esq.
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