Medicaid Estate Recovery Programs

Medicaid is a joint program of the Federal government and the States, and was started in 1965. Medicaid provides benefits and financial assistance to lower-income level individuals who have no health insurance coverage. The program always had a condition which allowed states to recover from the expenses they provided by requiring the individual’s assets as repayment for the long time care and services provided to them after their death.

Congress passed the Omnibus Budget Reconciliation Act in 1993. This called for states to employ a Medicaid Estate Recovery Program. The OBRA 93 stipulated that states must pursue recovering costs for medical assistance which include nursing home or other long-term institutional services, home and community based services, hospital and prescription drug services given to the recipient while they were in a nursing facility or home, and other services included in the Medicaid program.

An estate is any property, bank account, excess finances in a burial trust, or other assets where the Medicaid recipient had any legal interest. This also encompassed jointly owned property, trusts, and life estates.

Medicaid estate recovery programs may get repayments from the estates of deceased individuals who were aged 55 or more during the time they were given Medicaid assistance. If the person was institutionalized permanently or can no longer be sent home, recovery could also be taken, regardless of age.

These repayments or recovery can be waived based on certain situations. One would be if there is a surviving spouse or a disabled child who was dependent on the individual receiving Medicaid benefits. Repayment would then be made after the dependent’s death, and the amount is equal to the value they inherited from Medicaid assistance.

The Medicaid estate recovery program can also be waived for cases when there is a child that the recipient left who is aged below 21. Repayment would be rescheduled until the child reaches the age of 21. The debt would then be equal to amount they inherited from the recipients Medicaid benefits.

If the recovery program would cause excessive poverty, the repayment can also be waived. The debt would then be collected after these difficulties have been passed, or if the person dies.

Since every state has different guidelines for Medicaid estate recovery programs, this can be confusing for a lot of people. There are states that put Medicaid estate recovery program in place only in cases when they will be lucrative. Claims will be deemed not cost-effective when the value of the estate is $10,000 or below, the recoverable value of Medicaid benefits is $3,000 or less, and if the cost of selling a property would be equal to or much higher than the property’s value.

There are different rules that each state follows when allowing waivers to be filed or requested. These states are given great liberty by federal guidelines when classifying hardship exemptions. But according to federal guidelines, there are two property categories that can be qualified for hardship exemption waivers. These properties are lands and houses of fairly small value and income-producing property. These include farms or family businesses that can be indispensable for the survivors support.