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MEDICAID
ESTATE RECOVERY PROGRAM
INTRODUCTION
 | The exempt character of resources as defined in prior
sections of this article pertains only to eligibility for Medicaid during the
recipient's lifetime. However, these same assets will lose their exempt status
if held until death, and may be liable at that time for reimbursement to the
state for the covered medical assistance paid during the recipient's lifetime,
even if the assistance had been correctly paid. |
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Pennsylvania's Estate Recovery Program is administered by the DPW for
the purpose of recouping medical assistance payments made to "covered
recipients," i.e. persons who were age 55 (not age 65) or older when the
assistance was received, and who were receiving assistance on or after August
15, 1994 for nursing facility services, home and community based services, and
related hospital and prescription drug services.
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SURVEY OF PENNSYLVANIA ESTATE RECOVERY PROGRAM
SOURCE OF RECOVERY
| The only assets subject to recovery in Pennsylvania are
"estate property," i.e., the real and personal property of a decedent that is
subject to administration by a decedent's personal representative, whether
actually administered or not. (This type of property is also called "probate"
property.) |
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This limitation will exclude all types of non-probate
property, such as assets owned by the decedent and his or her spouse as tenants
by the entireties or with others as joint tenants with right of survivorship, Totten trust ("ITF") bank accounts, "TOD" securities, and all
beneficiary-designation property (e.g., life insurance, retirement benefits, and
annuities) that are payable to named beneficiaries rather than to the decedent's
estate.
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WAIVER OF RECOVERY RULE IN UNDUE HARDSHIP CASES
DPW will waive its recovery claim in cases of undue
hardship, including those involving the recipient’s:
| Primary Residence (including expenses incurred in maintaining the
residence) |
| Income-producing Assets
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Recovery will also be waived if the estate has a gross value of $2,400 or
less and there is an heir.
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RIGHT TO POSTPONE PAYMENT OF CLAIM
| DPW has attempted to resolve the issue of how the state's
recovery claim will be handled if the individual dies survived by a spouse or by
a minor or disabled child. Under federal law, the state's right of recovery must
be postponed until after the death of the recipient's surviving spouse and until
there is no child of the recipient who is disabled or under age 21. Under this
rule, many years could possibly elapse between the recipient's death and the
date the state's claim matures. |
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DPW's position is that the personal representative has a
duty to protect the state's claim during the postponement period. This duty will
be deemed complied with if, after liquidating the assets as appropriate and
paying all expenses of administration and superior claims of creditors against
the estate, the personal representative takes one of several actions that are
permitted by DPW regulations.
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PLANNING IN LIGHT OF MEDICAID ESTATE RECOVERY PROGRAM
| The effectiveness of any proposed lifetime Medicaid
eligibility technique must be analyzed in light of the state's post-death
recovery right. |
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Since probate assets will be subject to recovery, solely
owned assets that are exempt during the recipient's lifetime for Medicaid
eligibility purposes will likely become subject to the state's recovery right
following death.
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The primary example of such an asset would be the
individual's solely owned principal residence, which is exempt during life but
would be includable in the probate estate at death.
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Certain techniques are available that can effectively
remove property from the potential probate estate but will not be deemed a
disqualifying lifetime transfer under the Medicaid rules.
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Please consult Mr. Hagan for details.
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