How does the state recover the cost of benefits through estates?
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
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
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
Through Transfers by Affidavit section).
When can the state file a claim in an estate
and what constitutes the claim amount?
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
- 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.
How and when will a claim in an estate be paid?
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
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.
Are the heirs allowed to keep anything from the
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
- 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.
Are there situations when the state's estate claim will not be paid or payment will be delayed?
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
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.
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
- 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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