When can Medicaid estate recovery reach a family home?
Key takeaway
Medicaid estate recovery can reach a deceased recipient’s home interest if it falls within the state recovery estate and the assistance is recoverable, subject to survivor timing restrictions, applicable home occupant protections, and hardship waivers.
Start with three questions: What assistance did Medicaid pay for, what interest did the recipient own, and who survives or lives in the home?
Assistance subject to recovery
For assistance received at age 55 or older, states must seek estate recovery for nursing facility services, home and community based services, and related hospital and prescription drug services.
States may elect broader service recovery for that age group, excluding Medicare cost sharing and benefits covered by the federal exclusion for specified Medicare beneficiaries.
Federal law also requires recovery from a qualifying institutionalized recipient’s estate or upon sale of property subject to an institutional lien.
That institutional category requires inpatient status in a nursing facility, intermediate care facility for people with intellectual disabilities, or other medical institution, and a requirement to contribute all income except a minimal personal needs allowance toward care.
The state must also determine, after notice and an opportunity for a hearing, that discharge and return home cannot reasonably be expected.
Survivors affect recovery timing
Recovery may occur only after the surviving spouse’s death and when there is no surviving child under 21 or qualifying blind or disabled child.
For states eligible to participate in the federal SSI program, the child protection covers blindness or permanent and total disability. For other states, it covers blindness or disability under the federal statutory definition.
These are timing restrictions. A surviving spouse or qualifying child does not, by itself, permanently eliminate every later recovery claim.
Additional protections for occupants of a home subject to an institutional lien
For a home subject to an institutional lien, recovery also waits while a qualifying sibling or caregiving child lawfully resides there and has done so continuously since the recipient’s admission.
The sibling must have resided in the home for at least one year immediately before admission.
The caregiving child must have resided there for at least two years immediately before admission and establish to the state’s satisfaction that their care allowed the recipient to remain home rather than enter an institution.
A Minnesota deed example
In Minnesota, for example, a beneficiary receiving property through a transfer on death deed can be required to account to a state or county agency for an authorized public assistance claim or lien.
In Minnesota, that liability concerns only the claim remaining unpaid after estate assets are applied and cannot exceed the value of the interest transferred to the beneficiary. Other states differ.
Gather the deed, the agency’s claim, the estate asset records, and the value of the transferred interest before discussing the claim with an attorney.
Minnesota hardship relief
In Minnesota, for example, a person entitled to statutory notice of an estate recovery claim may apply for a full or partial undue hardship waiver. The waiver must benefit the person claiming hardship.
In Minnesota, divesting or diverting assets to avoid estate recovery does not constitute undue hardship. The commissioner may hear statutory appeals when a waiver application is denied wholly or partly.
In Minnesota, an approved hardship waiver can postpone recovery against a homestead occupied by a qualifying owner other than the recipient’s spouse.
In Minnesota, the person must have owned an interest at death and actually and continuously occupied the property as a residence for at least 180 days before death.
In Minnesota, the property must also be classified as that person’s homestead for property tax purposes. Recovery then waits until the person no longer resides there or the property is sold or transferred.
In Minnesota, shared ownership or occupancy alone does not establish this protection. Other states differ.
Two related terms
Medicaid recovery estate
The Medicaid recovery estate includes property and other assets in the recipient’s estate under state probate law. At state option, it may include interests held at death passing through joint tenancy, tenancy in common, survivorship, a life estate, a living trust, or another arrangement, limited to those interests.
Clearance certificate
In Minnesota, for example, a clearance certificate is a county agency certificate concerning real property described in a transfer on death deed. It can specify continuing medical assistance claims, liens, or county conditions binding the property, and other states differ.
Starting the planning conversation
The home question is a useful reason to begin a conversation you may have postponed.
"So I would just encourage all the listeners, if they haven't had a conversation with their estate planning attorney, or they've put off estate planning like most Americans, just 'cause they don't want to think about it,"
Frequently asked questions
Can the state recover every correctly paid Medicaid benefit?
No. Federal law prohibits adjustment or recovery of correctly paid Medicaid assistance outside the statutory recovery categories. This rule does not determine recovery of incorrectly paid benefits.
How does a Minnesota beneficiary obtain and record a clearance certificate?
In Minnesota, for example, a claimant, attorney, or agent may apply in the property’s county, and the beneficiary must record the clearance certificate in every county containing the described property.
In Minnesota, the claimant must be a person claiming an interest under a transfer on death deed. The application goes to the county agency, and both the application and certificate must contain each covered parcel’s legal description.
In Minnesota, recording the certificate establishes statutory compliance. County conditions specified in the certificate bind the property.
In Minnesota, for registered property, a new certificate of title cannot issue before the clearance certificate is recorded.
In Minnesota, a certificate showing continuation of a medical assistance claim or lien leaves the property subject to it. Other states differ.
Can a Minnesota beneficiary seek permission to sell despite a public assistance claim?
Yes. In Minnesota, for example, a person claiming an interest under a transfer on death deed may seek a district court order allowing sale free and clear of a public assistance claim or lien.
In Minnesota, the request goes to the court in the county containing the property or where a probate proceeding affecting the grantor’s estate is pending.
In Minnesota, an order without a hearing requires good cause and whatever notice the court requires. The court may impose terms protecting the state or county agency.
In Minnesota, sale proceeds remain subject to statutory disposition requirements, so permission to sell does not itself forgive the claim. Other states differ.
Sources
- 42 U.S.C. §1396p, federal recovery categories, survivor timing, institutional liens, home occupants, and recovery estate definition.
- Minnesota §507.071, subdivisions 22 through 24, beneficiary liability, clearance certificates, and court approved sales.
- Minnesota §256B.15, estate claims, hardship waivers, appeals, and qualifying homestead postponement.
- Minnesota §525.313, disposition of proceeds referenced in the transfer on death deed sale provision.