To compensate for multi-billion dollar Medicaid expenses, the federal government established the Medicaid Estate Recovery Program (MERP). This program requires states to recoup Medicaid payments made to benefit recipients 55 years and older. This also includes payments for assisted living.
MERP may not be especially successful; however, it does cause damage to families of loved ones who receive Medicaid benefits for nursing home care. It’s especially devastating if the family member receiving care didn’t draft an estate plan before their death. That’s why you need the skilled estate lawyers at Landskind and Ricaforte. They can help ensure that your property and assets are as fully protected as possible.
Understanding the Medicaid Estate Recovery Program
Senior citizens who need help covering the high cost of medical care after being disabled or incapacitated can get approved for Medicaid benefits. If you’re a recipient of Medicaid benefits, you must spend all assets and income to pay your share of your long-term care needs, and Medicaid will pay for what your money doesn’t cover. You’re still allowed to keep your home while receiving benefits, as you may need in-home care or plan to return to your home after recovering or residing in assisted living for a while.
However, there’s a downside to this arrangement. The state may put a lien on your assets and property and collect on the debt when you die. This is known as “Estate Recovery.”
Seizure of Your Home and Other Assets
When you die, the state wants to recoup whatever it can from your estate because it helped pay for any medical care you needed after turning 55. The State of New York can claim your home and other assets to pay back the money they paid for your care. Using MERP, the state can seize your bank accounts or any other liquid assets or personal belongings—even if they are designated for your heirs.
When the State Can’t Seize Your Assets
- If your spouse is still alive, no action is taken until they die
- If the resources, income, and property belong to an Alaskan Native or American Indian, no action is taken
- If there are minor children living in the home, you may qualify for “deferred recovery”
- If disabled or blind children live in the home
- If you had joint ownership rights with your sibling who shares the home, the state might delay recovery
When Medicaid Might Waive the Estate Recovery Program
It’s possible to request the state to waive this kind of estate recovery. If you’re a surviving heir or beneficiary, you may make an “undue hardship” request within 30 days of Medicaid making an estate claim notice. Undue hardship can mean:
- An asset that is the only income to the family, such as a farm or family business with limited income
- The property has a modest value and is the primary residence of the beneficiary
The state won’t, however, consider waiving the estate recovery just so a beneficiary can maintain a certain type of lifestyle.
How a Medicaid Trust Can Help
A Medicaid trust, also known as an asset protection trust, can help protect your home from seizure. This trust transfers assets out of your name and into trust ownership, and you permanently relinquish ownership of everything inside the trust. When you do this, nothing in the trust can be considered a resource or asset when Medicaid wants to be reimbursed for the benefits it provided. The experienced Medicaid estate planning attorneys can help you get the necessary financial support for a nursing home and preserve your property at the same time.
Advantages of an Asset Protection Trust
- You can live in your home as long as you want, even though “technically” the trust owns your home.
- You can use any asset or piece of property held by the trust.
- You can give estate planning responsibilities to a relative by appointing them as trustee.
To ensure that the trust protects you, your property, and your assets, you need our New York elder law attorneys to help be sure your assets are transferred properly.