Question:

I have been receiving Medicaid benefits for ten years and had no idea until recently that the state could seek money for medical expenses they paid for after I turned 55. I am 65 and am planning to sell my house in a few years and move out of state to retire. Can they seek money from the sale of the house? If I die in another state, will they go after my estate, leaving less money for my heirs? Does the state seek the original amount of the medical expense or one increased for many years of inflation?

Response:

There’s good news and bad news. First, the good news: You can sell your house without reimbursing the state for the Medicaid benefits you have received to date. The state can only put a lien on your house if it’s paying for nursing home care for you. That doesn’t seem to be your situation, at least not yet.

Now, the bad news: The state’s claim for reimbursement against your estate applies no matter where you live. However, many states only seek recovery against the beneficiary’s probate estate and you may be able to avoid the claim by using a trust, joint ownership, or a life estate to hold title to your new home and other assets. (Here’s an explanation of the difference between probate and non-probate property.) A local elder law attorney can advise you on what steps make the most sense in your situation and in your new state. You can find one at www.elderlawanswers.com.

And the not-so-bad news: While your current state and your new state’s Medicaid agencies may both have claims for recovery against your estate, the actual process may mean that your estate only pays for any claim from the Medicaid agency in the state in which you are residing when you pass away. For instance, the mechanism for this is in Massachusetts requires all probate administrators to notify MassHealth (Medicaid in Massachusetts) of the probate proceeding so that it can assert its estate recovery claim, if any. But there’s no duty to notify MassHealth if the probate occurs in another state.

And finally some good news: In calculating the amount of recovery, Medicaid agencies use the actual amount paid out without interest or any adjustment for inflation.

Key Takeaways:

• If you are a Medicaid beneficiary, you can sell your house without having to reimburse the state for prior Medicaid benefits.
• A lien is imposed only if Medicaid is paying for nursing home care for you and even then, the state is only entitled to reimbursement after your death.
• However, the proceeds of the house sales will probably make you ineligible for benefits going forward.

Related posts:

What are the Tax Consequences if I Transfer Real Estate into Trust?

What Should I Do with My Uncle’s Accumulated Income So He Can Be Eligible for Medicaid?

How Can I Protect Out-of-State Property from Medicaid Estate Recovery?

When to Transfer Mother-in-Law’s House When Applying for Medicaid