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What Assets are Exempt from Medicaid Estate Recovery in New York City?
In New York, everything that passes under a valid will, by intestacy or under a revocable trust is reachable by Medicaid estate recovery. Nothing in that category is exempt. In practice, a person who qualified for Medicaid has usually already spent down, moved assets into an irrevocable trust or bought a Medicaid-compliant annuity, so by the time of death there is often little left in the estate. The one valuable asset most recipients still own is the primary home, because the home is not counted when eligibility is determined. The home, however, is not exempt from estate recovery.
What is Medicaid estate recovery?
Medicaid estate recovery is the state program that recovers, from the estate of a deceased Medicaid recipient, the cost of the Medicaid benefits that person received. Because an applicant’s assets and income must fall below the eligibility limits, the estate of a recipient is usually small. The home is the exception, and it is the asset that recovery efforts most often target. Recovery takes two forms: a lien placed on the home while the recipient is alive, and a claim made after death.
Pre-death liens
Medicaid may place a lien on the home of a living recipient in two situations: when a court has ordered that Medicaid benefits were incorrectly paid to the recipient, or when the recipient is in a medical institution and is not reasonably expected to be discharged and return home. If a recipient who was not expected to leave the institution is in fact discharged and returns home, the lien may be dissolved.
Even where one of those conditions is met, no pre-death lien may be imposed while any of the following relatives lawfully lives in the home.
| Relative living in the home | Condition |
|---|---|
| Spouse | No further condition. |
| Child | Under 21, or blind, or permanently and totally disabled. |
| Sibling | Holds an equity interest in the home and lived there for at least one year before the recipient was admitted to the medical institution. |
Post-death recovery
When the recipient dies, Medicaid recovers either when a home subject to a lien is sold or by filing a claim against the recipient’s estate. Here too, no recovery on the lien is made while a protected relative continues to live in the home.
| Relative still living in the home | Condition |
|---|---|
| Spouse | No further condition. |
| Child | Under 21, or blind, or permanently and totally disabled. |
| Sibling | Holds an equity interest in the home, lived there for at least one year before the recipient’s admission to the medical institution, and has lived there continuously since that admission. |
| Adult child | Lived in the home for at least two years before the recipient’s admission, provided care that allowed the recipient to stay at home rather than in an institution, and has lived there continuously since the admission. |
Which assets are actually reachable
Whether a particular recovery effort is valid is not always obvious. The New York Department of Health’s website describes estate recovery as reaching property conveyed to a survivor, heir or assign through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement. That expanded definition is not expressly found in Social Services Law § 369 or 18 NYCRR 360-7.11. Under those provisions, only property passing by will, by intestacy or under a revocable trust is included. When the state asserts a claim against an asset that passed outside the estate, the claim deserves a close look before anyone pays it. We discuss the options in defending a Medicaid claim in an estate and in how to find out whether there is a Medicaid lien.
If you are an executor facing a Medicaid claim, or a family member wondering whether the home can be protected, we can review the file and tell you where you stand. Call us at 212-233-1233 or email [email protected].
About the Author
Albert Goodwin Esq. is a licensed New York attorney with over 18 years of courtroom experience. His extensive knowledge and experience make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
