An important part of estate planning is preparing for the recovery of any Medicaid assistance, especially if you or your spouse are over age 55 and have received any Medicaid benefits.
Medicaid is a federal and state partnership that helps people with limited resources and income pay for health and long-term care costs. People over age 55 usually receive Medicaid funding for nursing facility services, home and community-based services, and related hospital and prescription drug services.
There is a common misconception that once a person has exhausted their personal financial resources in paying for the cost of their health and long-term care, then Medicaid funding will continue paying for care at no cost to the person. While it is true that Medicaid will begin covering certain health expenses once a person meets asset and resource requirements, Medicaid funding is more of a loan, not a cost-free grant of funding.
Because certain assets, such as a house, are disregarded when determining whether a person qualifies for Medicaid, federal and Nebraska law requires the Nebraska Department of Health and Human Services (DHHS) to recover any Medicaid expenses. The debt of Medicaid expenses arises during the recipient's lifetime; however, DHHS only seeks recovery after the recipient's death or the death of the recipient’s spouse. The outstanding debt is recovered from the former Medicaid recipient’s estate through a process known as Medicaid Estate Recovery.
If a Medicaid recipient was 55 years of age or older, then their assets after death are subject to Medicaid Estate Recovery. Like with most rules, there are exceptions. First, DHHS cannot recover costs of Medicaid assistance provided to a recipient under the age of 55 unless the recipient permanently resided in a medical institution. Second, DHHS cannot recover costs if the deceased recipient is survived by a spouse, a child under 21, or a dependent regardless of age who is blind or permanently disabled.
After a Medicaid recipient passes away, DHHS works with families, attorneys, and courts to recover funds for the Nebraska Medicaid Program. In Nebraska, DHHS acts as a creditor with a claim against the assets or estate of a decedent; however, DHHS usually does not place liens on specific property for purposes of Medicaid Estate Recovery. While a former Medicaid recipient’s assets and estate are subject to recovery, the recipient’s heirs may seek an exemption or reduction if recovery would create a hardship.
Planning for Medicaid Estate Recovery is critical if you or your spouse are over the age of 55 and have received any Medicaid benefits. If you have any questions about Medicaid Estate Recovery and how it may impact your estate plan, please reach out to any of the highly knowledgeable and experienced estate planning attorneys at Erickson | Sederstrom at (402) 397-2200.