Dear Mr. Premack: My mother recently passed in the state of Texas. She did have a life insurance policy of $10k, and she did have a small amount of cash in a bank account. We have used the life insurance for burial. Will we be subject to Medicaid Estate Recovery Program? How do we find out? â€“ MG
Dear Mr. Premack: Is a home mortgage, whether a regular mortgage or reverse mortgage, paid before a Medicaid Estate Recovery Program claim? – SB
Medicaid Estate Recovery Program is the Medicaid Estate Recovery Program, a facet of the Medicaid program that has existed since 2005. Whenever any person applies for Medicaid benefits (for instance, to help pay for a nursing home) that person is informed, in writing, about Medicaid Estate Recovery Program and its processes. Eventually, when the Medicaid recipient dies, Medicaid Estate Recovery Programâ€™s task is to recover for the state whatever it can legally recover, as reimbursement for the taxpayerâ€™s assistance.
The Medicaid Estate Recovery Program regulations set out a variety of situations under which Medicaid Estate Recovery Program cannot pursue a claim. For instance, if there is a surviving spouse than Medicaid Estate Recovery Program cannot pursue a claim. After the state is informed of the death of the Medicaid beneficiary, Medicaid Estate Recovery Programâ€™s collection agent â€“ called HMS â€“ sends a letter to someone close to the decedent (like the person who indicated on the Medicaid application that they should be contacted). The letter asks whether there are any circumstances which would cause HMS to cease pursuing a claim. If such a reason exists and is reported, HMS will indeed cease.
Legally, there are two sides to the Medicaid Estate Recovery Program process. First is the official yet preliminary correspondence in which HMS as a collection agency tries to bully the family into paying. This is not yet the â€śclaimâ€ť and is not yet legally enforceable. Second is the actual claim which must be filed by Medicaid Estate Recovery Program in probate court. They must do so within certain time limits, and if there is no probate then they have no legal forum in which they can enforce their claim.
One of Medicaid Estate Recovery Programâ€™s regulations states that their claim must be cost effective for the state to take action. By definition, if the estate has value below $10,000 then Medicaid Estate Recovery Program will not pursue a claim. Also, they may not include in their calculations the value of any life insurance policy that was payable to a third party (like the children) instead of being paid to the decedentâ€™s estate. So, the answer for MG above is that you will be pestered with Medicaid Estate Recovery Programâ€™s preliminary correspondence, that they should not have a legal claim, and that since there will be no probate they have no way to legally enforce a claim.
Another Medicaid Estate Recovery Program regulation is that, when they do bring a claim in probate court, their claim must be classified along with all other claims received by the executor. A secured claim, like a home mortgage or reverse mortgage, takes priority over the Medicaid Estate Recovery Program claim. The bank will get its money because it has a lien against the house to enforce its claim. Medicaid Estate Recovery Program cannot place liens. So, the answer for SB above is that the loan gets paid before Medicaid Estate Recovery Program gets paid.
Whenever a loved one dies, who was a Medicaid beneficiary, it is a good idea for the executor and immediate family to consult with a certified elder law attorney about probate and about the Medicaid Estate Recovery Program process as it applies in their situation.
Paul Premack is a Certified Elder Law Attorney with offices in San Antonio and Seattle, handling Wills and Trusts, Probate, and Business Entity issues. View past legal columns or submit free questions on legal issues via www.TexasEstateandProbate.com or www.Premack.com