Senior citizens often need assistance covering the astronomical costs of around-the-clock care after suffering a disability. With bills piling up, getting approved for Medicaid can be a huge relief, but there is a pitfall you need to know about ahead of time. Although Medicaid does cover medical costs, the state has an option to recover its payments by selling your assets after death.
Basics of Medicaid Estate Recovery in New York
Medicaid already features stringent eligibility requirements that look at both your current assets on hand and some financial decisions made in the past. Unfortunately, it also includes a provision allowing the state of New York to recoup costs by claiming things in your estate after you pass away.
Estate recovery can occur for patients age 55+ who received benefits, or anyone who was institutionalized through Medicaid. If you received coverage for anything other than a nursing home stay and are 54 or younger, then estate recovery doesn’t apply. Recovering money through your estate is always on the table, regardless of your age, if Medicaid paid for a nursing home’s services.
The state can attempt to take your assets to cover anything that was paid for through the healthcare program, such as:
- Community services
- Hospital in-patient treatment
- In-home care
- Nursing home stays
- Prescription drug costs
Because the family home is often the only asset a Medicaid recipient owns that would significantly cover medical costs, the estate recovery process may involve taking and selling your house. The best way to avoid that devastating loss for your family is to come up with an estate plan well in advance that protects everything you’ve acquired during your life.
Exemptions and Limitations to Medicaid Estate Recovery
The good news is that some assets are completely exempt from recovery if your family goes through the probate process after you pass away. Anything that is meant to be dispersed to a named beneficiary is usually safe from Medicaid, as are:
- Life insurance policies
- Joint owned bank accounts
- Payouts from a 401(k), IRA, payable on death account, or similar account types
- Property placed in certain kinds of trusts
- Real estate that is jointly owned
- Real estate or assets that are entirely in your spouse’s name or owned by your children
Whether estate recovery is attempted at all also hinges on your family status at the time of death. In most cases, there will be no recovery made if you have a surviving spouse. The state is likewise prevented from taking your assets if you have a surviving child under age 21, or if you have a child of any age who has a permanent disability.
Here’s where things get a little tricky, however. The specific parts of your estate that are available to be recovered change over time as new laws are passed. For instance, a change at the federal level now allows each individual state to utilize an expanded definition of what is included in a Medicaid recipient’s estate. That expansion now allows the state to come after property such as your home in certain cases, even if you have a surviving spouse.
A skilled attorney can help in that regard, as there are other possible exemptions to utilize. In situations where taking the home would cause an undue hardship on surviving family, your attorney can file a waiver to argue the property should be exempted. You can also plan ahead by placing assets such as real estate in a trust to be distributed according to your wishes by a trustee.
Have a Plan in Place to Protect Your Family Before Disaster Strikes
You earned your home, so you should get to decide where it goes after you are gone, even if you needed Medicaid to pay for healthcare costs. That’s why it is critical to meet with an experienced elder law attorney ahead of time and plan for problems down the line. Don’t wait to secure your loved one’s financial future. Message us or call to set up a consultation with Alatsas Law Firm today.