Defending a Medicaid Claim Against an Estate in New York

By Albert Goodwin, Esq., Law Offices of Albert Goodwin, New York estate litigation attorney.

This guide is for an executor or administrator in New York who has received a letter from the Human Resources Administration (HRA) or a county Department of Social Services (DSS) asserting a Medicaid claim against the estate. It explains where the agency's authority comes from, how a claim must be presented under the Surrogate's Court Procedure Act, how to demand proof and reject what is not supported, which survivors block recovery, how spousal refusal and elective share claims actually work, and how settlement with the agency proceeds. If you are planning ahead rather than defending a claim, see our page on the Medicaid asset protection trust; this page is about defense after a death.

Who Sends the Claim and What It Looks Like

In New York City, estate claims are handled by HRA's Bureau of Liens and Recovery. Outside the city, each county DSS has a resource recovery or legal unit that does the same work. The agency learns of the death in several ways: the probate and administration petitions in Surrogate's Court ask whether the decedent received Medicaid or other public assistance, the nursing home or managed long-term care plan closes the case, and the agency runs its own death matches.

The claim usually arrives as a letter addressed to the fiduciary or the estate's attorney. It identifies the decedent, the Medicaid case number, and a single dollar figure described as the amount of medical assistance paid on the decedent's behalf. It may state the period covered. It rarely comes with an itemized ledger. The letter often asks the fiduciary to confirm the estate's assets and to pay the claim before any distribution. Nothing in the letter requires immediate payment, and paying before the claim has been verified is a mistake that can expose the fiduciary personally.

The Legal Basis for Recovery in New York

Federal law requires every state to seek recovery from the estates of certain Medicaid recipients. The federal provision is 42 U.S.C. § 1396p(b). New York implements it in Social Services Law § 369 and in the Department of Health regulation at 18 NYCRR § 360-7.11.

Under SSL § 369(2)(b)(i), the agency may recover medical assistance correctly paid from the estate of a recipient who was 55 or older when the assistance was received, or who was permanently institutionalized in a nursing facility and could not reasonably be expected to return home. New York does not limit the claim to nursing home care. The claim can include hospital and physician services, prescription drugs, home care, and capitation payments made to a managed long-term care plan. In community-care cases the monthly capitation payments frequently make up most of the total, and they are the first thing to scrutinize because the agency paid them whether or not services were used in a given month.

Assistance received before the recipient turned 55 is not recoverable unless the permanent institutionalization rule applies. Assistance paid incorrectly is a different matter, pursued as an overpayment rather than an estate claim.

What Counts as the Estate: Probate Assets Only

Federal law lets a state define "estate" narrowly, as property passing under a will or by intestacy, or broadly, to include joint accounts, life estates, living trusts, and other non-probate transfers. SSL § 369(6) adopts the narrow definition: all real and personal property and other assets passing under a valid will or by intestacy.

New York tried to expand the definition once. The 2011 budget legislation (Chapter 59 of the Laws of 2011) added non-probate assets such as jointly held property, retained life estates, and revocable trust assets to the recoverable estate. The expansion was repealed in the 2012 budget (Chapter 59 of the Laws of 2012), effective April 1, 2012, before the Department of Health issued the regulations needed to apply it. New York has been probate-only ever since.

For a fiduciary, the consequence is direct. A house held jointly with right of survivorship, a deed with a retained life estate, a bank account with a Totten trust or payable-on-death designation, a life insurance policy or IRA with a named beneficiary, and assets in a properly funded trust pass outside the estate and are not reachable by the Medicaid claim. The claim attaches only to what the fiduciary actually administers. If the probate estate is a car and a checking account, that is the universe the agency can reach, regardless of what else the decedent owned. The first task on receiving a claim is to confirm which assets are in fact probate assets and which are not.

How a Claim Must Be Presented: SCPA Article 18

A Medicaid claim is a creditor's claim against the estate and follows the same rules as any other creditor in Surrogate's Court. Those rules are in Article 18 of the Surrogate's Court Procedure Act, and they give the fiduciary leverage that the agency's letter does not mention.

The seven-month window under SCPA § 1802

SCPA § 1802 provides that a fiduciary who distributes estate assets in good faith after seven months from the issuance of letters, without having received a claim, is not personally liable to a creditor who presents a claim later. The seven months run from the date letters testamentary or letters of administration were issued, not from the date of death. The late claim is not extinguished; the agency can still pursue assets that remain in the estate and can pursue distributees under SSL § 104. But the fiduciary who waited the full seven months and distributed without notice of the claim is protected. A fiduciary who distributes earlier, or who distributes with knowledge of the claim, carries the risk personally to the extent of what went out.

Form of the claim and the right to demand an affidavit: SCPA § 1803

SCPA § 1803 requires a claim to be in writing and to state the facts on which it is based. The fiduciary may require the claimant to present the claim by affidavit stating that it is justly due, that no payments have been made on it, and that there are no offsets. A one-page letter with a lump sum does not meet the fiduciary's needs. The fiduciary should respond in writing demanding an itemized statement showing, for each payment, the date of service, the provider or plan, the service category, and the amount paid, together with confirmation that the decedent was 55 or older on each date of service. The agency has this data in its claims system and can produce it.

Allowing or rejecting the claim: SCPA § 1806

Once the itemization arrives, the fiduciary reviews it and either allows the claim, allows part of it, or rejects it. Rejection must be in writing and should state the grounds: payments before age 55, duplicate entries, periods outside the ten-year limit, services for a different beneficiary, capitation months after the decedent's discharge or death, or the absence of any probate asset to recover from. Under SCPA § 1806(3), if the fiduciary neither allows nor rejects the claim within 90 days after it is presented, the claimant may treat it as rejected and proceed. A fiduciary who intends to contest the claim should reject it affirmatively rather than let the 90 days run in silence.

What happens after rejection: SCPA §§ 1809 and 1810

After a rejection, the agency has a choice. Under SCPA § 1810 it may commence a proceeding or action to enforce the claim within 60 days of the rejection. If it does not, the validity of the claim is determined by the Surrogate when the fiduciary's account is judicially settled. The fiduciary also has the option, under SCPA § 1809, to petition the court to determine the validity of the claim before the accounting. In practice most contested Medicaid claims are resolved either by negotiated compromise or in the accounting proceeding, where the fiduciary lists the claim as rejected and the agency must appear and prove it. Our page on estate accounting proceedings explains how rejected claims are scheduled and tried.

Order of payment: SCPA § 1811

If the claim is valid and the estate is insolvent or nearly so, SCPA § 1811 governs the order of payment. Reasonable funeral expenses and the expenses of administration, including the fiduciary's commissions and attorney's fees, are paid before any creditor. The Medicaid claim is then paid as a debt alongside other creditors in the statutory order. In a small estate this ordering frequently determines how much, if anything, the agency actually collects.

Time Limits on the Agency

Two separate clocks apply. The first is the SCPA § 1802 presentation window described above, which protects the fiduciary against personal liability. The second is the substantive limit in SSL § 104(1), which authorizes a public welfare official to recover from the estate of a person who received assistance during the preceding ten years. Medicaid paid more than ten years before the recipient's death is outside the claim. In a long nursing home stay funded by Medicaid for twelve or fifteen years, the early years drop off, and the itemization should be checked against the date of death to confirm the agency has not included them.

Survivors Who Block Recovery

SSL § 369(2)(b)(ii), tracking 42 U.S.C. § 1396p(b)(2)(A), prohibits recovery while the recipient has a surviving spouse, and prohibits it at any time when the recipient has a surviving child who is under 21 or who is blind or permanently and totally disabled. These are not discretionary; the agency may not recover at all while the exemption applies.

• Surviving spouse: Recovery from the recipient's estate is deferred until the spouse dies. Because New York is probate-only, the recipient's probate assets have usually passed to the spouse by then, either under the will or by intestacy, and are no longer the recipient's estate. The Court of Appeals addressed this in Matter of Craig, 82 N.Y.2d 388 (1993), holding that SSL § 369 does not authorize recovery from the surviving spouse's own estate for Medicaid paid to the predeceased recipient. The agency's remaining theory in that situation is relative responsibility under SSL §§ 101 and 104, which depends on the spouse having had sufficient means during the period the assistance was paid.
• Child under 21: The exemption is absolute while the child is under 21. Once the child turns 21 the agency may present or revive its claim if estate assets remain.
• Blind or permanently and totally disabled child: The child may be any age. Disability is measured by the Social Security Act standard. A child receiving SSI or Social Security Disability benefits satisfies it; a child who has not been adjudicated disabled can still qualify, but the fiduciary will need medical evidence and should expect the agency to ask for it. The exemption applies whether or not the disabled child is a beneficiary of the estate.

The fiduciary must raise the exemption in writing and document it. The agency does not search for exempt survivors on its own.

Undue Hardship Waivers

42 U.S.C. § 1396p(b)(3) requires each state to waive recovery where it would cause undue hardship, and 18 NYCRR § 360-7.11 sets out New York's standards. The regulation treats the following as hardship: the estate asset is the sole income-producing asset of the heirs, such as a family farm or business, and the income it produces is limited; the estate asset is a home of modest value, generally measured against the average selling price in the county, and recovery would leave the heir living there without a home; or other compelling circumstances exist.

A hardship waiver is requested from the local district in writing, with supporting documentation: proof of the heir's residence in the home, the heir's income and assets, an appraisal or comparable sales, and medical or financial records showing the consequences of a forced sale. The request should be made promptly after the claim is presented and before the fiduciary lists the house for sale. The agency may grant the waiver in full, grant it in part, or deny it, and a denial can be challenged in the accounting proceeding. A waiver is a defense to the amount collectable, not to the validity of the debt, so it is usually pursued alongside the SCPA defenses rather than instead of them.

The Elective Share: What the Agency Can and Cannot Do

Many descriptions of this issue, including an earlier version of this page, get the fact pattern backwards. The elective share problem does not arise when the Medicaid recipient dies first. It arises when the Medicaid recipient outlives their spouse.

Under EPTL § 5-1.1-A, a surviving spouse may elect to take the greater of $50,000 or one-third of the deceased spouse's net estate, calculated to include certain testamentary substitutes, regardless of what the will provides. The election must be made within six months after letters issue and in no event later than two years after death, and the deadline may be extended by the court for cause. When the surviving spouse is on Medicaid in a nursing home and the deceased spouse's will leaves everything to the children, the agency's position is that the recipient holds a valuable right and must exercise it. A recipient who allows the election period to lapse has, in the agency's view, transferred assets for less than fair market value under SSL § 366(5) and 18 NYCRR § 360-4.4, which triggers a penalty period of ineligibility for nursing home Medicaid.

The right of election is personal to the surviving spouse. It may be exercised by a guardian with court authorization, but a creditor cannot exercise it in the spouse's place. Surrogate's Courts have declined to let DSS step into the recipient's shoes to elect against the predeceased spouse's estate, in decisions such as Matter of Mattei and Matter of Dionisio. The agency's practical remedy is therefore eligibility, not estate recovery: it may impose the transfer penalty on the recipient, or demand that the recipient's representative elect, rather than filing a claim against the deceased spouse's estate.

The Court of Appeals considered a related question in Matter of Tomeck, 8 N.Y.3d 724 (2007), where the Medicaid applicant had waived her elective share in a prenuptial agreement signed years earlier. The court held that the waiver meant there was no elective share available to her, and the agency could not treat the unexercised right as a disqualifying transfer. A valid, earlier waiver changes the analysis; a simple failure to elect does not.

For the fiduciary of the predeceased spouse's estate, the practical points are these. Expect the agency, or the recipient's guardian, to raise the election within the six-month window. Do not distribute the estate until that window has closed or a waiver or election is on file. If the recipient elects, the elective share passes to the recipient, becomes a countable resource, and will later be a probate asset of the recipient's estate subject to a § 369 claim. If no election is made and a penalty is imposed on the recipient, the family will need to decide whether to fund the penalty period privately or whether a supplemental needs trust under EPTL § 7-1.12 funded by the elective share is the better path.

Spousal Refusal Claims

Spousal refusal is a separate theory of liability with its own mechanics and should not be confused with estate recovery under § 369.

Under SSL § 366(3)(a), a community spouse may decline to make their income and resources available to the institutionalized or home-care spouse. The applicant then qualifies for Medicaid as if the refusing spouse's assets did not exist, even where they exceed the community spouse resource allowance. The Court of Appeals upheld the practice in Matter of Shah, 95 N.Y.2d 148 (2000). The price is that the agency acquires a right to sue the refusing spouse, during life or after death, for the cost of the care. The theory is an implied contract to support under SSL § 101 and the Family Court Act's spousal support provisions, FCA §§ 412 and 415.

How the agency values the claim

The agency's starting figure is the total Medicaid paid on the applicant spouse's behalf during the refusal period, at the Medicaid rate. The Medicaid rate for a nursing home bed is substantially lower than the private-pay rate the facility would have charged, which is one of the main reasons spousal refusal followed by a negotiated recovery often costs a family less than private payment would have. The agency does not get to recover the private rate, interest at the private rate, or anything beyond what it actually paid.

Defenses

The liability is not automatic and is not the full amount. FCA § 415 permits the court to order support "in such amount as may be deemed just" having regard to the respondent's means, and SSL § 101 ties relative responsibility to sufficient ability to pay. Courts hearing these cases, including Commissioner of Social Services v. Spellman, 173 Misc. 2d 979 (Sup. Ct. N.Y. County 1997), have treated the refusing spouse's own needs and resources as relevant to how much is owed. Defenses that recur:

• The spouse's own reasonable needs: housing costs, medical expenses, the spouse's own long-term care exposure, and income required to live on. A community spouse of modest means who refused in order to keep a co-op and a small pension has a strong argument that little or nothing is justly owed.
• Time limits: an action on the implied obligation is subject to the limitations periods in the CPLR and SSL § 104, and assistance paid outside those periods should be excluded.
• Proof of the amount: the agency must document what it paid, for which months, at what rate, as with any estate claim.
• Assets that were never the spouse's: property held in trust or belonging to children is not reachable by a judgment against the spouse.

During life or at death

The agency may sue the refusing spouse in Supreme Court during the spouse's lifetime, or it may wait and present a claim in the refusing spouse's estate when that spouse dies. If the claim is presented in the estate, it is presented under SCPA § 1802 like any other claim, and everything above about itemization, rejection, and the accounting applies. There are reasons to prefer resolving the claim during life: the spouse can negotiate from knowledge of the facts, the amount is fixed rather than growing, and a release protects the spouse's later estate plan. There are also reasons to wait: the agency does not pursue every refusal, the spouse may need the assets for their own care, and an estate claim can be defended by a fiduciary with the benefit of the exemptions and the § 1811 priorities. Which approach fits depends on the size of the claim relative to the spouse's assets and on the spouse's own health. Our page on responsibility for a spouse's debts in New York covers the broader relative-responsibility rules.

Settling with HRA or DSS: Process and Timeline

Most contested claims end in a compromise rather than a decision. The agency has statutory authority to compromise claims, it has limited litigation staff, and it generally prefers a certain payment now to an uncertain one after an accounting. The process, in order:

1. Acknowledge the claim in writing and demand itemization and an affidavit under SCPA § 1803. Do not confirm the estate's assets until you have confirmed the claim.
2. Request the supporting records: the itemized paid-claims history by date, provider, and amount; the Medicaid eligibility and budgeting file showing the date the decedent turned 55 and the dates of institutionalization; capitation payment records for any managed long-term care plan with the enrollment and disenrollment dates; and any prior liens, including a lien on real property under SSL § 369(1), which would have required notice to the recipient.
3. Audit the itemization against the ten-year limit in SSL § 104, the age-55 rule, the dates of death and discharge, duplicate entries, and payments for other household members.
4. Identify exempt survivors and hardship facts and send the documentation to the agency with a written statement of the exemption claimed.
5. Inventory the probate estate and separate it from non-probate assets. Provide the agency with a schedule of probate assets, administration expenses, funeral expenses, and competing claims, so that it can see what is actually available under SCPA § 1811.
6. Make a written offer that reflects the verified portion of the claim and the estate's actual collectible value after priority expenses. Where there are exemption or hardship defenses, the offer should say so and attach the proof.
7. Obtain a written release on payment, covering the estate, the fiduciary, and the distributees, and withdrawing any lien of record.

Realistic timing: the agency's initial response to a demand for itemization commonly takes weeks to a few months, and settlement discussions after that often run several more months. A fiduciary who has already received the claim should not expect to close the estate in under a year. If the agency does not respond at all, the fiduciary should reject the claim in writing, let the 60-day period under SCPA § 1810 run, and schedule the claim as rejected in the accounting so that the Surrogate can dispose of it.

Worked Illustrations

The following are hypothetical scenarios built to show how the rules interact. They are not descriptions of actual cases or results.

Co-op in Brooklyn with a disabled adult child

A decedent received $180,000 in Medicaid-funded home care through a managed long-term care plan after age 55. The probate estate is a Brooklyn co-op apartment worth $250,000, left by will to two children, one of whom receives Social Security Disability. HRA presents a claim for $180,000. Because the decedent has a surviving child who is permanently and totally disabled, SSL § 369(2)(b)(ii) bars recovery entirely, regardless of the fact that the co-op passes to both children. The fiduciary rejects the claim, provides the Social Security award letter, and distributes after obtaining a written withdrawal.

Long nursing home stay, small probate estate

A decedent spent thirteen years in a Queens nursing home on Medicaid, and the agency claims $900,000. The house was deeded to the children with a retained life estate eleven years before death, so it is not a probate asset. The probate estate is a bank account of $38,000. The fiduciary demands itemization, strikes the first three years as outside the ten-year limit in SSL § 104, and schedules $14,000 in funeral and administration expenses, which come first under SCPA § 1811. The agency's recovery is capped at what remains in the account; the house is untouched.

Spousal refusal, husband dies first

A wife entered a Westchester nursing home and the husband signed a spousal refusal. Medicaid paid $210,000 at the Medicaid rate over three years. The husband then died, leaving a probate estate of $400,000 to the children, and the wife is still living. DSS presents a $210,000 claim in the husband's estate on the implied-support theory. The fiduciary demands proof of the amounts and argues under FCA § 415 and SSL § 101 that the husband's own reasonable needs during the period, including his housing and medical costs on a fixed income, limit what was justly owed. Separately, because the wife survives her husband, the family must address her right of election under EPTL § 5-1.1-A within six months of letters, or face a transfer penalty on her Medicaid. The two issues are negotiated together.

Claim presented after the seven months

Letters of administration issued in January. The administrator waited until September, received no claim, and distributed the $120,000 probate estate to the three distributees. In November the county DSS presents a $75,000 claim. Under SCPA § 1802 the administrator is not personally liable for the good-faith distributions. The agency's recourse, if any, is against the distributees under SSL § 104, and each distributee may raise the same defenses the estate could have raised.

If You Are Planning Rather Than Defending

Everything above is easier to avoid than to litigate. Because New York recovers only from probate assets, the planning answer is to hold assets so that they pass outside probate and outside the look-back period. The vehicle most families use is an irrevocable trust, described on our Medicaid asset protection trust page. That page covers the five-year look-back, the home, and the community spouse. This page does not repeat it.

Frequently Asked Questions

Can Medicaid take my parent's house in New York?

Only if the house is a probate asset, meaning it passes under the will or by intestacy, and no surviving spouse, minor child, or blind or disabled child blocks recovery. A house held jointly with right of survivorship, deeded with a retained life estate, or held in a trust is not part of the recoverable estate under SSL § 369(6). If the house is a probate asset and a family member has been living there, a hardship waiver under 18 NYCRR § 360-7.11 may still prevent a forced sale.

How long does DSS or HRA have to file a claim against the estate?

The agency should present its claim within seven months after letters are issued under SCPA § 1802. A claim presented later is not void, but the fiduciary who distributed in good faith after the seven months is protected from personal liability. Separately, SSL § 104 limits recovery to assistance paid within the ten years before death.

Can an executor refuse to pay a Medicaid claim?

Yes. The executor can reject the claim in whole or in part in writing under SCPA § 1806. The agency then has 60 days under SCPA § 1810 to bring a proceeding, failing which the claim is decided by the Surrogate in the accounting. An executor who pays an unverified claim and leaves beneficiaries short can be surcharged, so rejection and verification protect the fiduciary as much as the beneficiaries.

Does the agency have to prove the amount?

Yes. Under SCPA § 1803 the fiduciary can require the claim to be presented by affidavit with supporting facts, and in the accounting the agency bears the burden of proving the claim it asserts. A lump-sum letter is not proof.

Will Medicaid pursue a surviving spouse during their lifetime?

Recovery under SSL § 369 against the recipient's estate is deferred while a spouse survives, and under Matter of Craig the agency cannot later recover from the spouse's own estate under § 369. In a spousal refusal case the picture is different: the agency may sue the refusing spouse during life or present a claim in that spouse's estate.

Is the Medicaid claim paid before the funeral bill and legal fees?

No. Under SCPA § 1811, reasonable funeral expenses and administration expenses, including attorney's fees and commissions, are paid before creditors.

Primary Sources

• N.Y. Social Services Law § 369 (estate recovery) and § 104 (recovery from estates; ten-year rule)
• N.Y. SCPA Article 18 (claims against estates)
• 42 U.S.C. § 1396p (federal recovery, exemptions, hardship)
• 18 NYCRR § 360-7.11 (New York recovery and hardship regulation)
• NYC Human Resources Administration and NYS Office of the Medicaid Inspector General

Talk to a New York Estate Attorney About a Medicaid Claim

If you are the executor or administrator of a New York estate and HRA or a county DSS has presented a Medicaid claim, we can review the claim, demand the itemization, raise the exemptions and defenses that apply, and negotiate with the agency or try the claim in the accounting. We handle these matters in Surrogate's Courts across New York City, Long Island, and the Hudson Valley. Call the Law Offices of Albert Goodwin at 212-233-1233 or email [email protected]. Related pages: estate administration in New York, obtaining letters testamentary, and estate accountings.

This article is general information about New York law and is not legal advice. Statutes, regulations, and agency practices change, and the outcome of any claim depends on its facts. Consult a New York attorney about your estate before paying, rejecting, or settling a Medicaid claim.