Understanding Medicaid Estate Recovery

Medicaid recipients relax with staff member in nursing home setting.

When considering a long-term care plan involving applying for Medicaid coverage, prospective Medicaid applicants and their families should be aware of the Medicaid estate recovery program. Medicaid estate recovery applies to public health care coverage for nursing home Medicaid, community Medicaid, and Affordable Care Act (ACA) programs, if the Medicaid recipient was age 55 or older at the time he/she received Medicaid.

Under the estate recovery program, following a Medicaid recipient’s death, the State of New Jersey is entitled to recover payments made on behalf of the Medicaid recipient. Those payments include a set per-person monthly “capitation fee” paid by Medicaid to a managed care organization to cover the beneficiary (which can be a much higher dollar amount than the actual cost of the services/benefits received by the Medicaid recipient in a given month). If the Medicaid recipient was age 55 or older at the time he/she received Medicaid, Medicaid will impose a lien on any real or personal property owned by the Medicaid recipient at the time of death. N.J.S.A. 30:4D-7.2 et. seq.; 42 U.S.C. §1396p(b)(1)(B).

The term “estate” is broadly defined under the estate recovery program. For purposes of Medicaid estate recovery, regulations define the term “estate” to include not just the real and personal property and other assets within the individual’s estate, but also “any other real and personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death, to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement, as well as any proceeds from the sale of any such property which remain in the estate of the survivor, heir or assign of the beneficiary, to the extent of the beneficiary’s interest….” The term “estate” does not include life estates in which the Medicaid beneficiary had a lifetime interest that expired upon the beneficiary’s death, or certain types of trusts. N.J.A.C. 10:49-14.1(n).

There are preconditions that must be met in order for Medicaid to pursue estate recovery. For example, correctly paid Medicaid benefits may not exist or be pursued if there is a surviving spouse, or a surviving minor or disabled child. N.J.A.C. 10:49-14.1(j).

In order to assert an estate recovery claim, Medicaid will file a claim or lien against an estate after receiving notice of the death of the Medicaid beneficiary. The executor or administrator of the Medicaid beneficiary’s estate may request a payoff statement of the amount due, and may apply for a waiver or compromise of the estate recovery claim, based on undue hardship. N.J.A.C. 10:49-14.1(h).