Medicaid estate recovery in New York is more common than people realize. Under Social Services Law (SSL) Section 369, the state of New York may and is actually required, to recover Medicaid benefits upon the death of a recipient.
It applies to persons who received Medicaid benefits at the age of 55 or older or to persons who, regardless of age, were permanently institutionalized prior to their death.
The state can recover the amount of Medicaid correctly paid from the date the recipient turned 55 years of age or the date of permanent institutionalization, whichever occurs first.
Medicaid recovery is taken from the estate of a person upon their death.
Simply put, if a person received Medicaid at the age of 55 and up, or if a person, whatever their age, permanently resided in a medical institution, the state may recover correctly paid Medicaid from the assets of their estate upon their death.
Under 18 NYCRR 360-7.11, for purposes of Medicaid estate recovery, a person’s estate includes anything that they have legal title or interest in at the time of death. This includes real property (land, houses, buildings), personal property (belongings), and other assets that are passed to heirs with or without a will. To the extent of a person’s interest immediately prior to death, the estate includes assets conveyed to a survivor, heir or assign through a joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangements. It also includes jointly owned financial institution accounts, jointly held real property, life estate interests, interests in certain trusts and annuities regardless of whether there is a named beneficiary or right of survivorship.
There are instances that Medicaid estate recovery is not allowed, these are:
Yes. Medicaid estate recovery may be waived by the state on the basis of undue hardship that may befall the surviving heirs or beneficiaries of the deceased’s estate.
Surviving heirs, beneficiaries or fiduciaries of the estate may request that the state waive the Medicaid estate recovery, either in whole or in part, if it will result in undue hardship. This can be done buy requesting a consideration of undue hardship within 30 days of the notification of Medicaid estate claim.
Undue hardship may exist when the asset subject to recovery is the sole income-producing asset of the beneficiary such as a family farm or family business and income produced by the asset is limited. It may also exist when the asset subject to recovery is real property that is the primary residence of the beneficiary and is of modest value. A real property is considered to be of modest value if, at the time of the decedent’s death, its value is no higher than 50 percent of the average selling price in the county where the home or property is located.
Other compelling circumstances may also be considered by the state in deciding to waive Medicaid estate recovery due to undue hardship. But, it has been consistently held that the inability of beneficiaries to the estate to maintain a pre-existing lifestyle, or alleged hardship resulting from Medicaid or estate planning methods involving divestiture of assets is not among the instances when the state would waive Medicaid estate recovery due to undue hardship.
A post-death lien, to the extent of the decedent’s interest in the property at the time of death, will be placed on the real property unless the state defers or waives the Medicaid estate recovery in the instances mentioned above. This lien serves as a notice to mortgage lenders and prospective purchasers of the Medicaid estate recovery claim against the property.
However, even if there is a lien on the property, recovery by the state may still be deferred if:
The lien is filed in the county clerk’s office in the county where the property is located and shall remain on file to protect the interest of the Medicaid program to the extent of the claim against the recipient’s estate, less any payments actually received.
Medicaid estate recovery will be deferred only until:
So to answer the title question, “is Medicaid truly free?” the answer is no, not at all. Knowing why and how Medicaid estate recovery can affect your properties and possibly the lives of your survivors could help you mitigate future inconvenience that you may leave behind. Talk to us to see how we can help you.