Medicaid Estate Recovery

Authored By: North Mississippi Rural Legal Services LSC Funded


Medicaid Estate Recovery

  1. What is Medicaid Estate Recovery?
  2. What are the Medicaid Transfer of Assets Rules?

What is Medicaid Estate Recovery?

Current law requires that the State of Mississippi attempt to recover from the estate of deceased individuals who were 55 or older, who received Medicaid assistance, up to the value of nursing facility services and home and community based waiver services, and related hospital and prescription drug services. The Division of Medicaid must be notified as a creditor in estate proceedings in these cases. Estate recovery is required by federal law and became mandatory in 1994.

Estate property includes any real property owned by the recipient in its entirety or by shared ownership. This includes home property and other real estate. The Division of Medicaid will not seek to recover from the estate of an individual to the extent that the Medicaid recipient owns only a life estate in the real property.

Estate property also includes personal property owned by the recipient at death, such as cash reserves, stocks, bonds, automobiles, mobile homes or other property owned in full or in part.

The claim shall be waived by the State: a) If there is a surviving spouse b) if there is a child who is under the age of twenty-one (21) years or who is blind or disabled or c) As provided by federal law and regulations if it is determined by the Division of Medicaid or by court order that undue hardship would result. Examples of situations where undue hardship will be found in Mississippi include cases in which the estate subject in recovery is the sole income producing asset of the survivors, such as a family farm; a homestead of modest value; or other compelling circumstances. Other compelling circumstances include a situation in which an adult relative has lived in the home of the decedent, depended upon that home for her principle place of residence for at least one year before the decedent entered the nursing home and gave care so that the person did not have to enter a nursing home during that year.

The Division of Medicaid also allows $5000 for funeral and burial expenses to be taken out of the value of the estate if there are no funds already set aside for that purpose.

There are also homestead exemptions which apply to prohibit the Division of Medicaid from claiming against the estate if an heir claims the homestead. See Section 85-3-33 Miss. Code Ann.

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What are the Medicaid Transfer of Assets Rules?

Civil Penalty

Transfers of assets for less than fair market value by an individual or spouse within 36 months of application for Medicaid for nursing home and home and community based care (HCBC) may result in denial of Medicaid coverage during a penalty period. The penalty is calculated by dividing the uncompensated value of the assets transferred by a statewide average monthly cost of nursing home care ($2600/mo. in 2002). Penalties run from the date of transfer. Penalties apply only to Medicaid coverage for nursing home care or waivered home and community based care (HCBC).

Assets affected include all income and resources of the individual and spouse. Assets include those to which the individual or spouse was entitled but did not receive due to action on their part. Examples of such action are waiving pension income or right to receive an inheritance, not "accepting or accessing" a personal injury settlement, having a tort settlement diverted into a trust, or refusing to take legal action to obtain court-ordered support.

Fair Market Value

The care provided by family members is presumed to be free, absent a written agreement made at the time the care was given that compensation is intended.

Exceptions to Transfer Penalties

Certain transfers are exempt from transfer penalties: Transfer of the home to spouse, dependent or disabled child; a brother or sister who has equity interest in the home and was residing in the home for at least a year before the individual's admission to the nursing home; child of the individual, who was residing in the home for at least two years prior to the individual's admission and who provided care which allowed the person to live at home rather than in an institution.

Transfers to a spouse or to another for the sole benefit of the spouse; transfers from the spouse for the sole benefit of the spouse, transfer to a trust solely for the benefit of the individual's blind or disabled child, and transfers to a trust solely for the benefit of a disabled individual under the age 65.

Transfers where a satisfactory showing is made to the state that (1) the individual intended to dispose of the assents for fair market value, (2) the assets were transferred exclusively for a purpose other than to qualify for Medicaid, or (3) the transferred assets were returned to the individual.

Transfers where applying the penalty would work undo hardship. Hardship criteria includes cases where (1) the applicant has no way to pay; (2) the transfer was not knowingly authorized; or (3) the individual assigns rights to recover the transferred asset to the State. At minimum, states must allow hardship waiver if the absence of Medicaid would deprive the individual of medical care so that his life would be endangered, or if necessities of life would be denied. The state must provide notice, a hearing process and a separate process for appealing an adverse decision.

Jointly-held Assets

An asset held with another person is considered to be transferred when any action is taken that reduces the individual's ownership or control of it. The addition of another name to an account may not necessarily constitute an impermissible transfer, unless that action actually restricts the applicant's rights concerning the property. But, withdrawal of funds by another joint tenant, not considered a transfer in the past, is now viewed as such. Regulations concerning joint ownership of bank accounts establish a rebuttable presumption of complete ownership of the joint account by the applicant.

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Last Review and Update: Nov 20, 2002