Medicaid Liens and Estate Recovery

By Matthew A. Quick There are two main ways a state can, and in some circumstances must, reclaim expenses paid on behalf of a Medicaid recipient. The first is a Medicaid Lien, which gives states the ability to recover the expenses of long-term care of a Medicaid recipient by placing a lien on the home of the Medicaid recipient. The second is Estate Recovery, which is the process employed by states to recover the expenses of long-term care paid on behalf of a Medicaid recipient where the state acts as a creditor against the Medicaid recipients estate, post-death.

MEDICAID LIENS

Medicaid Liens typically apply only to the homes of permanently institutionalized individuals. A permanently institutionalized individual is one who cannot reasonably be expected to return home. A Medicaid Lien has priority over other people who claim an interest to a Medicaid recipient's home and its priority over other liens is determined by state law.

There are restrictions on the placement of Medicaid Liens. These restrictions are intended to protect homes when they are needed by Medicaid recipients or certain close family members. The restrictions follow: The Medicaid recipient must be deemed permanently institutionalized; and No lien may be placed if any of the following relatives of the Medicaid recipient live in the home: 1. A spouse; 2. A child under 21, or a blind or permanently disabled child of any age; and 3. A sibling with an equity interest in the home who has lawfully resided in the home for at least one year before the Medicaid recipient’s admission to a medical institution.

A Medicaid Lien does not interfere with the Medicaid recipient’s use of the home. However, if a Medicaid recipient attempts to transfer the home that has a Medicaid Lien, states can require the Medicaid recipient's equity in the home be used to pay the expense of the state's Medicaid expenditures.

ESTATE RECOVERY

Estate Recovery occurs after a Medicaid recipient's death, during the settlement of the deceased Medicaid recipient's estate. Estate Recovery can apply to personal property or real estate, but most commonly it involves the Medicaid recipient's home.

There are restrictions on Estate Recovery, which are again intended to protect homes when they are needed by certain close family members. The restrictions follow: 1. When there exists a surviving child who is under age 21, or a blind or disabled child, no matter where he or she lives (Estate Recovery may take place when the child no longer meets these criteria); 2. When a sibling with an equity interest lives in the home who has lawfully resided in the home for at least one year before the Medicaid recipient’s admission to a medical institution and continuously since; 3. When an adult child lives in the home who has lawfully resided in the home for at least two years before the Medicaid recipient’s admission to a medical institution and continuously since and can establish that he or she provided care that may have delayed the recipient’s admission to the nursing home or other medical institution; and 4. During the lifetime of the surviving spouse, no matter where he or she lives.

In these restricted instances, the survivor can typically inherit the home and other assets to use as they wish. However, the state may place a lien or file a claim against the survivor for payment of the Medicaid expenditures upon the death of the survivor.

Medicaid and the Look Back Provision (Illinois)

By Matthew A. Quick In the case of Zander v Adams, the court held that a transfer of a beneficial interest in an Illinois land trust to a child, 37 months prior to applying for Medicaid benefits, invoked the penalty provision, resulting in non-payment of Medicaid. The court said that a transfer of a beneficial interest in land trust was a payment from a revocable trust because it was a noncash disbursement or disbursement of property rights as to the real estate parcels which were principal of land trust, thus 60 month look-back period applied to her Medicaid application.

Social Security Denial Example

By Matthew A. Quick The court in Schaaf v Astrue, held that a claimant could be denied disability benefits based on claimant's loss of partial use of one arm. The court opined that an administrative judge could properly find that claimant's injury was not severe enough to prevent him from performing light duty work. Further, the administrative judge was not required to give controlling weight to a treating physician's contrary opinion since said opinion was not supported by medically acceptable clinical and laboratory diagnostic techniques to document any of claimant's symptoms that would prevent him from working. Moreover, an administrative judge could discount claimant's contention that he suffered from extreme pain where medical records did not show that claimant made similar claim.