New Law Substantially Extends Reach Of New York State’s Medicaid Estate Recovery Law

Earlier this year the New York State Legislature, prompted by the Governor’s Medicaid Redesign Team, amended Section 369 of the Social Services Law to increase New York’s right to recover money from the estate of a deceased Medicaid recipient. The amendment expands the definition of the term “estate” in the Medicaid Law to include non-probate assets, such as jointly titled bank accounts, jointly titled real property, undistributed income from irrevocable “Medicaid Trusts,” and life estate interests in real property that were retained by a Medicaid recipient after transferring the property to another person. Retirement accounts such as IRAs and 401(k) plans may also be affected. These new provisions will impact all Medicaid recipients who pass away after September 8, 2011.

Therefore, upon the death of a Medicaid recipient over age fifty-five, the State of New York may now seek to recover all Medicaid benefits previously paid on the Medicaid recipient’s behalf from the following non-probate assets:

  • Life Estates – from real property passing upon death to the remaindermen in the deed.
  • Joint Bank Accounts – from monies held in such accounts.
  • Medicaid Trusts – any income from the trust that had not been distributed during the lifetime of the Medicaid recipient.
  • Retirement Accounts – from monies passing to the beneficiaries of such accounts, such as IRAs and 401(k) plans.

The laws and policies regarding Medicaid eligibility are constantly in flux, and while it is certain that this new law will be challenged in litigation across the State, it is best to be prepared and to plan accordingly.