Medicaid Estate Recovery Statute of Limitations

Last updated: September 09, 2019
Medicaid Long Term Care | Questions and AnswersCategory: Estate RecoveryMedicaid Estate Recovery Statute of Limitations
Anonymous asked 1 year ago

Is there a statute of limitation on Medicaid Estate Recoveries?

1 Answers
medicaidplanner Staff answered 1 year ago

Yes, there is a generally a statute of limitation on Medicaid estate recoveries. (A statute of limitation is a limited timeframe in which action can be taken, or in this case, a state can file for estate recovery). While the statute of limitation varies based on the state in which one resides, this period is usually limited to one year following the death of a Medicaid recipient.

Let’s back up. All states have a Medicaid Estate Recovery Program in which they are required to seek reimbursement for the amount they paid for long-term care (such as nursing home care) following the death of a Medicaid recipient. However, in order for the state to collect reimbursement, the individual must still have assets when they die. Since a senior must have limited assets in order to be eligible for Medicaid (in most cases, $2,000), and one’s primary home is generally exempt from Medicaid’s asset limit, it is often the only high valued asset remaining from which the state can seek reimbursement. Therefore, through estate recovery, Medicaid can force the sale of the home in order to be reimbursed for payments made on behalf of the Medicaid recipient.

Some states only permit estate recovery from assets that go through probate, while other states will also seek reimbursement from assets outside of one’s probate estate. (Probate is a legal process in which one’s will is validated, their assets are listed and the value determined, debts are paid, and if applicable, remaining assets are distributed to named beneficiaries). The assets that go through probate are assets in which the deceased has sole ownership. Put differently, assets that are jointly owned do not go through the probate process. Therefore, if a deceased Medicaid recipient’s house is jointly owned, it will not go through probate, and it is protected from Medicaid estate recovery.
There are specific situations in which a statute of limitation is not relevant, as the deceased Medicaid recipient’s estate is exempt from recovery:

• The individual was under 55 years old when receiving Medicaid, but was not receiving care in a nursing home.
• The individual has a surviving spouse. However, according to federal law, the state can file for estate recovery after the surviving spouse passes away. However, not all states will, and in those states that will, a statute of limitation likely applies.
• The individual has a child who is blind, disabled, or under 21 years old. In some cases, a state may file for estate recovery once a child reaches the age of 21. That said, a statute of limitation should apply.

In addition, it is possible for a Medicaid recipient to legally transfer his / her home without violating Medicaid’s look-back rule, and therefore, jeopardizing his / her Medicaid eligibility. Transferring the home means it will not be a part of a deceased Medicaid recipient’s estate. The transfer of the home can be done in the following situations:

• The Medicaid recipient’s adult child was living with him / her for a minimum of two years immediately preceding moving to a Medicaid-funding nursing home. In addition, during this timeframe, the adult child provided a level of care that delayed the need for nursing home placement. This is known as the caregiver child.
• The Medicaid recipient’s sibling has ownership in the home and lived in the home for a minimum of one year prior to the Medicaid recipient’s nursing home placement. This is called the sibling exemption.

Learn more about Medicaid’s estate recovery program and how to protect one’s home here. Medicaid estate recovery is a complicated subject with many moving pieces based on the state in which one resides and his or her circumstances. For specific questions and / or concerns, it is suggested one contact a professional Medicaid planner. To locate one in your area, click here.

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