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What is Medicaid Estate Recovery?

medicaid estate recovery
Medicaid Estate Recovery

Florida Statutes 409.9101 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 their probatable assets.

Some things to know:

When an estate is probated, Medicaid is treated like any other general creditor (similar to how Visa or FPL is treated if those bills are unpaid upon the death of the account holder).

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.

General Rule: No recovery during the life of a Medicaid recipient

No lien is created against the property of a Medicaid recipient until that person passes away. Except:

  • If Medicaid incorrectly paid (i.e. person not entitled to those benefits) and receives a judgment by a court;
  • If Medicaid recipient owns real property without “intent to return home.” (Unless Medicaid recipient’s spouse (community spouse) resides at home; Unless child who is under 21, or blind or disabled resides in the home; or Unless the Medicaid applicant has a sibling that has lived in a home for one year and has an equity interest in the home.

Medicaid Recovery in Personal Injury Cases

In Florida personal injury cases, if Medicaid paid medical expenses related to the personal injury case, Medicaid can recover such amounts upon personal injury settlement or verdict from the medical recovery portion of the personal injury case (i.e. not from lost wages or pain and suffering portion of personal injury recovery). Medicaid need not wait for the Medicaid recipient to pass away to recover from the personal injury settlement or verdict proceeds.

What Assets / Property Can Medicaid Recover From After Medicaid Recipient Dies?

42 USC 1396p (b)(4): Medicaid can recover from the “estate” of the Medicaid recipient, however, the term “estate” is defined in the state’s probate laws. Estate is either defined as those assets/property that pass through probate or some expanded estate recovery definition. Luckily, in Florida, Medicaid is limited to recovering from probatable assets only.

Your Florida Medicaid lawyer can significantly reduce the assets Medicaid will be able to take from the estate. In fact, in pre-planning cases, Medicaid estate recovery can legally and ethically be completely avoided altogether!

If there is no probatable estate, there is no Medicaid estate recovery.

What happens if the community spouse dies first?

But even if the community spouse refuses to support the Medicaid-recipient (see the article on spousal refusal Medicaid Florida), what happens if the community spouse dies first?

State law will not allow the community spouse to completely disinherit the sick spouse through the spouses of the deceased’s estate. Medicaid can assume the right the institutionalized spouse had to that elective share.

In this case, again, your elder care lawyer can explain options on how to prevent the surviving spouse from losing their Medicaid benefits if the well spouse passes away first.

Call 305.614.5162 to schedule a Florida Medicaid-planning consultation.

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. Note: just because assets are in a revocable trust, does not mean that probate is avoided. Creditors must still be paid from assets in a revocable trust. Again, this is another reason why meeting with an elder care lawyer who specializes in Medicaid planning is essential.

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 them by creditors. Also, the house is protected if the Medicaid recipient is survived by a spouse or young child or disabled child that resides 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 steps on how to protect the home (and rental properties if applicable).

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 Conduent. 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: | 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. Medicaid estate recovery contact information at the link.

Once Medicaid has been notified, they will send a letter substantially similar to the below letter, which was sent after the beneficiary of a pooled special needs trust in Florida passed away (portions of the letter have been redacted).

Elder Care Lawyer Resources

Medicaid Trust Estate Recovery

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

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How to Get Medicaid to Pay for Some or All of Your Long-Term Care Expenses:Without having to wait 5 years | without having to sell your house | without have to go broke first! (a Florida Medicaid Lawyer's Guide For Non-Lawyers)


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