What Assets are Exempt from Medicaid Estate Recovery in New York City?

In New York, all assets passing by valid will or intestacy or under a revocable trust are not exempt from Medicaid estate recovery. It is important to note, however, that a Medicaid recipient usually already has disposed of most of his assets and income in order to be Medicaid-eligible. With proper estate planning, most Medicaid recipients have spent down their assets, placed it in irrevocable trusts or in Medicaid-compliant annuities in order to be Medicaid-eligible.

Most Medicaid recipients only have their primary home as their asset when receiving Medicaid because the primary home is a non-countable asset for purposes of determining Medicaid eligibility. The primary home, however, is not exempt from Medicaid estate recovery.

What is Medicaid Estate Recovery?

Medicaid estate recovery refers to the state program that mandates the recovery of funds from the estate of Medicaid recipients to reimburse the estate for the cost of Medicaid benefits received. Because a Medicaid applicant’s assets and income must fall below a limit, Medicaid recipient’s assets and income, upon applying for Medicaid, are already minimal. The only valuable asset Medicaid applicants are allowed to retain that are not countable for purposes of determining Medicaid eligibility is the Medicaid applicant’s primary home. The primary home, however, is not exempt from Medicaid estate recovery.

Medicaid recovery efforts can be classified into pre-death and post-death.

Pre-Death Recovery Efforts

Medicaid may place a pre-death lien on the primary home of a Medicaid recipient who is still alive if:

• There is a court order stating that Medicaid benefits were incorrectly paid to the Medicaid recipient; or
• A Medicaid recipient is not reasonably expected to be discharged from the medical institution and to return home.

However, in cases when a Medicaid recipient who is not reasonably expected to be discharged is discharged and returns home, the lien may be dissolved.

The pre-death lien may also not be imposed in case any of the following relatives of the Medicaid recipient is lawfully residing in the primary home:

• The spouse;
• The child below 21, blind, or permanently and totally disabled; or
• Sibling with equity interest in the home and residing in the home for at least 1 year prior to the admission of the Medicaid recipient to the medical institution.

Post-Death Recovery Efforts

When the Medicaid recipient dies, Medicaid estate recovery is made when the house subject of a Medicaid lien is sold or as a claim on the estate of the deceased Medicaid recipient.

No recovery on the post-death lien shall be made when the following relatives of the deceased Medicaid recipient still live in the home:

• The spouse;
• The child below 21, blind, or permanently and totally disabled; or
• Sibling with equity interest in the home and residing in the home for at least 1 year prior to the admission of the Medicaid recipient to the medical institution, and who continuously lives in the home since admission of Medicaid recipient to medical institution; or
• Adult child residing in Medicaid recipient’s home at least 2 years prior to admission of Medicaid recipient to medical institution, who provided care to Medicaid recipient, allowing such Medicaid recipient to reside at home than in an institution, and who has continuously resided in the home since the date of the Medicaid recipient’s admission to the medical institution.

Determining the validity of the state’s Medicaid estate recovery efforts can be complex and requires the expertise of a Medicaid lawyer. For example, in the New York Department of Health’s website, it states Medicaid estate recovery to include property conveyed to a survivor, heir, or assign under joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement. However, this provision is not expressly included in Social Services Law 369 and 18 NYCRR 360-7.11.

Under the relevant regulations, only properties passing by will, intestacy, and revocable trusts are included. For this reason, having an experienced Medicaid attorney to advise you is important. Should you have concerns regarding Medicaid estate recovery, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].