Posted by: BlogMaster | February 13, 2012

The Exceptions to Estate Recovery

NY State’s expanded estate recovery has cast a wide net.  Many of my clients whose parent or parents received benefits before the law’s effective date in September 2011, and where death occurred before September 2011, have already received letters of ‘condolence’ with a Medicaid Estate Recovery Questionnaire from the NYS collection agency based in Texas. Note that emergency recovery regulations have lapsed, but NY State is expected to publish new regulations shortly.

Before you complete and submit the questionnaire, if you are a former or present client of this office, you can consult with my law firm as to whether or not it is legally appropriate to do so.

For others, it is important to note that the expanded recovery has exceptions:

  • The first ‘exception’ is deferral or postponement of the recovery.  My next blog will discuss waiver of the recovery.
  • There is no recovery during the lifetime of the surviving spouse, or at any time there is a child of the Medicaid beneficiary under the age of 21 years, or a child of any age who is blind or disabled (receiving social security disability or SSI).  When the prohibited period ends (the spouse dies, the minor becomes age 22 or older), the recovery will be pursued by NYS. 
  • A sibling with an equity interest (ownership share) in a home in which he or she lived with the Medicaid recipient at least one year before the recipient’s nursing home placement, and who continues to live in the home, will have the claim postponed until the home is sold or the sibling in equity dies.
  • An adult child who lived in the home for at least 2 years before the Medicaid recipient parent entered a nursing home, and who continues to live in the home, will have the claim postponed until the home is sold or the adult care giver child dies.
  • For both the sibling in equity and the adult care giver child, Medicaid is permitted to place a lien on the home and record the lien in the county clerk’s office.  This lien may affect the ability of the sibling or adult child to obtain a mortgage or refinance a mortgage if necessary after the death of the Medicaid recipient.
  • In some situations, a request that recovery be waived in full or in part should be made if payment of the lien will result in undue hardship.
  • In addition, Medicaid has indicated it will postpone/defer recovery on real property (even if not the homestead) if an heir or survivor of the Medicaid recipient has lived in the property from just prior to the Medicaid recipient’s death and is unwilling to sell the real property; the claim cannot be paid unless the property is sold because there are no other liquid or cash assets; and the heir or survivor can demonstrate he or she is unable to obtain financing (such as a mortgage) to pay the claim.  In addition, the heir or survivor must enter into a reasonable payment schedule with Medicaid, and agree to pay ‘reasonable’ interest. 

For example, assume an adult child and his or her family move back to the parent’s home to provide care and management for the parent.  They reside with the parent for one year while the parent receives Medicaid for care and then the parent dies.  The adult child is not a ‘caregiver’ adult child because he or she did not live in the home for 2 years and therefore cannot apply for a deferral of recovery. 

Instead, if the adult child is unwilling to sell the home, no other assets were owned by the senior to pay the claim, and the adult child does not qualify for a loan or financing to pay off the claim due to their personal lack of employment or credit issues, Medicaid should then permit the adult child to enter into a reasonable payment schedule with reasonable interest, and/or should defer the claim. It is hoped that future regulations will make more clear this option for the adult child.

Next week’s blog – Waiver of Recovery by Medicaid

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