What is Medicaid Estate Recovery?


Florida Statutes, Chapter 409 is known as the “Medicaid Estate Recovery Act.” It derives its authority from the Omnibus Budget Reconciliation Act of 1993 (known as OBRA-93) which mandated that states, including Florida, seek recovery from the estate of a Medicaid recipient. In other words, Medicaid recovery allows the medicaid agency to file a claim against the estate of a Medicaid recipient. Essentially it creates a debt that only has to be paid upon the death of the medicaid recipient, from the probatable estate. When an estate is probated, Medicaid is treated like any other general creditor.

If there are no cash assets available to satisfy the Medicaid estate-recovery claim, Medicaid may force the sale of non-exempt personal property or real property (not homestead) if the costs of sale do not exceed expected proceeds.

Medicaid’s right to estate recovery is limited to the value of medical services provided to the medicaid recipient.

Exceptions and Limitations to Medicaid Estate Recovery

·         Medicaid does not engage in its recovery effort until the Medicaid recipient passes away.

·         If Medicaid pays benefits to someone who is under age 55, no debt is created.

·         Medicaid will not enforce its debt in probate if, when the Medicaid recipient dies, he/she is survived by a spouse, child under the age of 21, or a child who is deemed permanently disabled by social-security standards, or a child who is blind.

·         Medicaid cannot recover from property that is exempt from creditors (e.g. homestead property).

·         Medicaid cannot recover from an estate under probate if the Medicaid estate recovery would result in an undue hardship for qualified heirs.

·         In Florida, Medicaid can only recover from the probate estate. The significance of this is huge. This is why it is incredibly important to engage in proper estate planning and proper medicaid planning. Assets in a revocable living trust can be accessed by creditors if there are insufficient assets to cover debts in the deceased's estate. However, with proper medicaid planning, the bulk of the medicaid recipient's assets will be sheltered and pass outside of probate.

Medicaid Estate Recovery: Undue Hardship Factors

An undue hardship concession is difficult to obtain from the Medicaid agency. Medicaid will consider the following factors: (i) does the heir reside at the home of the decedent, have they lived there for a year prior to the Medicaid-recipient’s death?, and does the heir own no other residence; (ii) would the heir be deprived of shelter, clothing, food or medical care if Medicaid were to pursue its right to estate recovery?; (iii) can the heir document that they provided full-time care to the medicaid-recipient which delayed their entry into a nursing home (for at least a year prior to the medicaid-recipient’s death?

Is my house at risk?

It could be. But as described above, Medicaid will not assert its recovery against a homestead if the probate judge declares the house homestead protected by creditors. Also the house is protected if medicaid recipient is survived by a spouse or young child or disabled child that reside in the house. But what if the health spouse (also referred to as “community spouse”) dies first? This is one of many reasons why engaging an elder law attorney is highly recommended. An elder law attorney can walk you through the proper medicaid-planning steps to protect the house, other assets and otherwise minimize Medicaid's ability to engage in estate recovery.

How To Determine How Much Is Owed to Medicaid?

In Florida, Medicaid contracts out its medicaid-estate recovery efforts to a 3rd party vendor called Xerox. Florida law requires a copy of the medicaid-recipient's death certificate be sent to:

Florida Medicaid TPL Recovery Program | P.O. Box 12188, Tallahassee, FL 32317-2188 | Email: flsubro@xerox.com | Fax: 844-845-8352

Medicaid will then file its claim with the applicable probate court. The clerk of courts will forward a copy of Medicaid's claim to the personal representative.

Related Medicaid Lawyer Resources

Will I Need to Sell My House to Qualify for Medicaid?

What is Medicaid Estate Recovery?