Your mother is in a nursing home and has qualified for Medicaid. She’s been able to keep her home because it is a non-countable asset. You have been paying the utility bills, insurance, maintenance and taxes. Your plan is that if she gets better and comes home, her home is still there for her. If she doesn’t ever come home, after she passes, you will sell the house, get reimbursed for what you have paid for her, and then share the profits with your siblings.
Unfortunately, mom is never able to return home and passes away in the nursing home. Over the years, you have paid out over $50,000 in expenses for your Mom’s house. You are happy with the sale price of $120,000, knowing that after you get reimbursed, you will have $70,000 to split between you and your siblings.
At the closing on the house, the title company gives you a closing statement showing you are going to receive $46,000 from the sale of the house! Someone must have made a mistake! There isn’t enough to fully reimburse you for your expenses, let alone provide you and your siblings with an inheritance. You have told your siblings they will be receiving cash! How are you going to explain this to them? Unfortunately, there is no mistake. You and your family are a victim of the Medicaid Estate Recovery Program.
When someone receives Medicaid benefits, the State keeps track of every penny they spend on the person. When the person dies, the State tallies their expenditures, and then looks to see if there are any assets in the person’s name that they can recoup some of its out of pocket expenses. This is called Estate Recovery, and it is mandated by the Federal government.
Certainly, it makes sense from a public policy standpoint that if the State helps pay for a resident’s care while they are living, then the State should be reimbursed, as fully as possible, by any assets remaining at the resident’s death. While this policy may make sense for the government, families are never happy to learn that the State will put a lien on the home and take up to the full value of the house after their loved ones die.
At one time, Missouri was only pursuing certain real and personal property that the Medicaid recipient had titled in his or her name alone. Now Missouri is taking advantage of the Federal law’s expanded definition of “estate” that allows the state to recover most assets in which the Medicaid recipient has an ownership interest, including jointly owned property, property held in trust, and life estates.
Many people believe a Beneficiary Deed will protect the home from Estate Recovery. A Beneficiary Deed allows a home to be passed on without the need of going through Probate. However, the State will open a Probate Estate, pull the house into Probate and collect whatever they can from the real estate.
There are ways to prevent Estate Recovery, but it takes the specialized skills and knowledge of an Elder Law firm to accomplish.