Whose estates are affected?
- Persons who received Medicaid services after age 55; and
- Persons who, regardless of age, were determined under procedures established by the state to be permanently institutionalized.
How is "estate" defined?
- At a minimum, states must pursue recoveries from the "probate estate," which includes property that passes to the heirs under state probate law.
- Alternatively, states can expand the definition of estate to allow recovery from property that bypasses probate -- for example, property owned in joint tenancy with rights of survivorship, life estates, living trusts, annuity remainder payments, or life insurance payouts.
How much is subject to recovery?
- At a minimum, states must recover amounts spent by Medicaid for long-term care and related drug and hospital benefits, including any Medicaid payments for Medicare cost sharing related to these services.
- At their option, states may recover costs of all Medicaid services paid on the individual's behalf.
- Recoveries may not exceed the total amount spent by Medicaid on the individual's behalf, nor the amount remaining in the estate after the claims of other creditors delineated in state law have been satisfied.
Exceptions and special cases:
- Estate recovery must be deferred (or waived, at the state's option) if the recipient is survived by certain close relatives -- a spouse or a child under the age of 21, blind, or permanently disabled.
- States must waive estate recoveries that would cause hardship.5
- States may pass laws that exempt certain types of property from estate recovery (for example the family homestead).
- States participating in the Partnership for Long-Term Care, a project to encourage more reliance on private insurance coverage for long-term care,6 may exempt some or all assets of policyholders from Medicaid estate recovery.