Pennsylvania is required by the federal government to operate an estate recovery program. Generally speaking, an estate recovery program is intended to allow a state to seek payment from the estates of decedents who were receiving Medicaid or Medical Assistance during their lifetimes. The PA estate recovery program was officially set out in Act 49 of 1994, Section 1412, 62 Pa. C.S. §1412. In Pennsylvania, the Department of Public Welfare (DPW) is the government arm that is empowered to seek repayment of medical assistance payments from a decedent’s probate estate.
Although Medicaid recipients do not have to be given notice of the estate recovery program, the Department of Public Welfare has an informational brochure about the estate recovery program which is provided to Medicaid recipients and their families when benefits are initiated. It is also expected, but not required that each DPW caseworker will discuss the estate recovery program with the recipients and their families.
It is sometimes difficult to focus on all of the related issues during the Medicaid application process. It is understandable that the applicants and their families are not necessarily paying close attention to the details of estate recovery while their primary concern is for the nursing care placement and overall well being of their family member. That being said, proper titling of assets and strategies relating to beneficiary designations can make tens of thousands of dollars of difference to the Medicaid recipient’s family after his or her death. We encourage you to pay attention to the caseworker during the application process and make sure that you familiarize yourself with estate recovery and the nuances that can be used to your advantage. Although, you might not think it is important, the estate recovery issues could impact your or your loved one’s estate in cases like those mentioned below.
There are some exceptions to the estate reach of the estate recovery program. Medical assistance paid on behalf of a recipient before he or she reached age 55 is not subject to repayment. The program also authorizes recovery only where Medicaid paid for specific types of services such as nursing home care and home care such as that provided through the Waiver Program. Other medical care and hospital care may be exempt from recovery.
Pennsylvania actually has a shorter estate recovery reach than many other states. Pennsylvania only permits recovery of probate assets. Probate assets are those in the decedent’s name alone and which do not pass to a joint owner or a designated beneficiary. Other states are permitted by their laws to seek recovery from jointly owned property and assets passing through beneficiary designation at death. Probate assets are easily identifies because it will be necessary for an executor, administrator of appointed estate representative to be appointed in order for the probate asset to be accessed.
It is important to note that assets such as IRA’s, 401k’s, Annuities and life insurance payable to the decedent’s estate are subject to estate recovery. Make sure to have the beneficiary designations properly constructed to avoid the estate recovery when possible.
Although there might not be an expectation of significant assets in the name of a Medicaid recipient at the time of his or her death, it is possible that there could be more than anticipated. As a matter of qualifying for Medical Assistance, he or she likely had little to nothing in the way of assets. That being said, there are a number of scenarios whereby a Medicaid recipient could own assets at death.
Some of those common scenarios are:
1. The decedent owned a primary residence that was not sold because the owner/Medicaid recipient stated a possible intention to return. Therefor the real estate was still there at the recipient’s death and in the decedent’s name.
2. The decedent was married at the time he or she qualified for Medicaid. His or her spouse died before the medicaid recipient and did not properly plan his or her estate and thereby left assets to the spouse who was still on Medicaid and living in a nursing home. It is important to note that this scenario can be avoided through proper planning, but is often overlooked.
3. The decedent was the named beneficiary of a deceased family member or friend and certain assets were paid to him or her after he or she had been receiving Medical Assistance.
4. The decedent was receiving Medicaid during his or her lifetime. Subsequent to qualifying for Medicaid, he or she successfully won a lawsuit that paid out a large settlement.
These are only some of the more common scenarios where assets are owned by the decedent which could potentially be available for estate recovery. It is important in these cases to enter into proper planning to turn the assets into non-probate status so that any balance at death can escape estate recovery.
If you or a loved one are facing nursing care needs and you have questions about the estate recovery program and how best to navigate to process, please contact Douglas L. Kaune at 610 933 8069 or dkaune@utbf.com to discuss your case more fully. Unruh, Turner, Burke & Frees, P.C. – Offices in Phoenixville, Malvern and West Chester.
