A Medicaid members’s estate includes all assets owned by the member at the time of death, including any savings or checking accounts (whether solely-owned, joint, or payable on death to a beneficiary), stocks, savings bonds, personal property, and real estate. Any assets that become part of the estate after the death of the member are also subject to the Estate Recovery Program, including inheritances and proceeds from life insurance policies, annuities, or death benefits if those proceeds are payable to the estate rather than a living beneficiary. (For more information about personal property.)

The legal process known as probate settles an individual’s estate by distributing the estate to creditors and heirs and beneficiaries. Creditors file claims in estates to ensure payment of a debt owed them. The state is paid before most other creditors. Both the state and other creditors are paid before any assets are distributed to heirs or beneficiaries whether or not there is a will.

There are two ways in which the state recovers benefits through estates. When probate is proceeding through a court, the state will file a claim for payment with the court and with the individual handling the estate. When there is no court proceeding, the state generally recovers benefits by filing a claim for payment with the individual handling the estate using a statutory probate process called Transfer by Affidavit. (For more information, see the Recovery Through Transfers by Affidavit section).

The state can file a claim in the estate of a member, if the member received care paid for by Medicaid in any or all of the following situations:

• While the member resided in a nursing home on or after October 1, 1991. The claim amount is for the cost of all services received while residing in a nursing home that were paid for by Medicaid.



• While the member was an inpatient in a hospital for a period of 30 days or longer on or after July 1, 1995, and was required to pay a patient liability amount. The claim amount is for the cost of all Medicaid-covered services received while an inpatient, on or after July 1, 1995.



• While the member was age 55 or older and resided in the community on or after July 1, 1995. The claim amount is for the cost of Medicaid-covered home health services and private duty nursing services received on or after July 1, 1995, and personal care services received on or after April 1, 2000. For home and community-based waiver members, the claim amount also includes waiver services, inpatient hospital services, and prescription drugs received on or after July 1, 1995. The state’s claim amount for Family Care enrollees in pilot counties, as home and community-based waiver members, will include the cost of services as reported by the Care Management Organization (CMO) to the Department of Health Services, inpatient hospital services, and prescription drugs received on or after February 1, 2000.

The state’s claim will usually be paid by the personal representative of the estate according to standard probate procedures. The state’s claim is paid after certain other expenses. Costs paid prior to the state’s claim are:

• Costs of administering the estate, including attorney fees. 
• Funeral costs. 
• Costs of the last illness, if any, that were not paid by Medicaid.

If there are insufficient assets in the estate to pay the state’s claim, the state is paid what is available and the recovery is ended. This applies to both claims in court probate proceedings and to the state’s recoveries using affidavits.

Yes. In the recovery of a claim against an estate, the court shall allow the heirs and beneficiaries to retain up to a total of $5,000 in value of the following personal property:

• The decedent’s wearing apparel and jewelry held for personal use. 
• Household furniture, furnishings, and appliances. 
• Other tangible personal property not used in trade, agriculture, or other business, not to exceed $3,000 in value.

NOTE: This does not allow heirs to retain liquid assets (cash or assets readily convertible to cash), only personal property.

Yes, the state’s claim will not be paid if there is any of the following:

• A surviving spouse. 
• A disabled or blind child. 
• A child under age 21.

Surviving spouses and minor, disabled, or blind children and their estates are completely immune from recovery of Medicaid benefits paid on a members’s behalf.

However, if there is a surviving spouse, a disabled or blind child, or a child under age 21 and there is an ownership interest in a home in the member’s estate, payment will be delayed because the court will place a lien on the home on behalf of the state. A lien placed during probate will not require payment as long as there is a surviving spouse, a child under 21 or a disabled or blind child regardless of the property being sold.

IMPORTANT NOTE:
Although the state is granted a lien by the court on the home of a surviving spouse, or a disabled, blind or minor child of a Medicaid member, if that property is sold for fair market value while the spouse and/or the disabled, blind or minor child lives, the state will release its lien and no recovery will be made.

Payment of the state’s claim may also be delayed in other instances. The state will receive a lien as full or partial satisfaction of its estate claim if there is a home in the estate and any of the following resides in the home:

• A son or daughter of the member who continuously lived in the home beginning at least 24 months before the member began receiving nursing home services, or services provided while considered institutionalized in an inpatient hospital, or home and community-based waiver services and who provided care to the member that delayed the member’s receipt of such services.
   
• A brother or sister of the member who continuously lived in the home beginning at least 12 months prior to the member receiving nursing home services, or services provided while considered institutionalized in an inpatient hospital, or home and community-based waiver services.

The state may recover on one of these liens when the caretaker child or brother or sister dies or sells/transfers the home.

The placement of a lien through an estate may be done for nursing home members, institutionalized inpatient hospital members, and community-based members. The reason being that this type of lien is a result of an estate claim.

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