When a person who is receiving Medicaid benefits to pay for long-term care dies, federal law requires the state where the deceased recipient lived to seek reimbursement from the deceased recipient's estate for the cost of services rendered. This is known as "Medicaid estate recovery" and applies to two groups of people: (1) anyone over the age of 55 who has received Medicaid assistance, or (2) anyone who is permanently institutionalized and has received Medicaid assistance, regardless of age.
It is important to note that each state has its own rules with regard to which assets of the deceased Medicaid recipient will be subject to Medicaid estate recovery. For example, some states may completely exempt a primary residence from recovery, while other states may completely exempt property that passes outside of probate from recovery. Therefore, it is essential to understand the Medicaid estate recovery laws of your state or the state where your elderly parents live since these laws vary immensely from state to state.
With so many states hurting economically, it should not be surprising that more and more states are becoming aggressive in their efforts to get repaid from the estates of deceased Medicaid recipients. And while the debate over the future of the federal estate tax is waged in Washington, the fact is that the vast majority of the population will never be affected by the tax since it is estimated that less than 0.5% of the Americans will have to pay the tax. But not so with Medicaid estate recovery - in essence, it is a "Medicaid death tax" that has, and will, affect millions of people.
- From the U.S. Department of Health and Human Services - Medicaid Estate Recovery
- What is Medicaid Estate Recovery?
- An Overview of Medicaid Eligibility and Benefits
- Qualifying for Medicaid for Long-Term or Nursing Home Care
- Medicaid Planning