The Jointly-Owned Property Exception to Medicaid Estate Recovery

Photo of Couple in Hospital Concerned About Medicaid Estate Recovery

Federal Medicaid law compels states to seek, when possible, reimbursement from individuals for Medicaid payments made on their behalf. There are a couple of mechanisms by which this happens. One of these is known as Medicaid estate recovery. When the law was written, the word "estate" was interpreted as the Medicaid recipient's probate estate. Your probate estate, of course, may exclude a lot of assets, including those held in trust, property subject to a life estate, and property held jointly with other people. As of 1993, states were given the choice to broaden the definition of estate to include these types of nonprobate assets to the extent of the Medicaid recipient's legal interest in the assets at the moment before their death.

In 2005, Ohio joined the ranks of several other states in adopting an expanded definition of what "estate" means within the context of Medicaid estate recovery. Unfortunately for Ohioans, that definition was as expansive as federal law allowed.

The resulting change meant that any of the deceased Medicaid recipient's probate assets were subject to recovery, along with nonprobate assets such as insurance benefits, trust assets, and payable-on-death accounts. What's more, unlike some states, Ohio left the door open to recovering benefits retroactively, not just for individuals who died after the passage of the law.

After a Medicaid recipient dies, Ohio Rev. Code § 2117.061 specifies that the person in charge of an estate has 30 days after letters testamentary or letters of administration are granted to submit a properly completed Medicaid estate recovery notice form to the administrator of the medicaid estate recovery program. In the case of summary release from administration, this form must be submitted within thirty days after the release from administration is granted. Once notice is filed, the state has 90 days in which to file a claim.

If you think you might successfully avoid Medicaid estate recovery by simply failing to provide notice, not so fast. The Ohio Supreme Court has ruled that the 90 day period in which the state may file a claim against the deceased recipient's estate does not begin to run unless proper notice is given.

Exceptions to Estate Recovery

While the state's right to pursue assets from the estate of a deceased Medicaid recipient are broad, there are a number of exceptions to estate recovery.

If a Medicaid recipient dies and his or her estate passes to a child under the age of 21, or to a disabled or blind child regardless of age, Medicaid will not recover assets from the estate. There are also situations in which family can request an undue hardship waiver to prevent estate recovery. These waivers are granted on a case-by-case basis; typically, waivers are granted only if the beneficiary or beneficiaries of the estate depended on the Medicaid recipient for financial support, and if estate recovery would force the beneficiaries onto public assistance or would otherwise deprive them of the necessities of life such as food, shelter, and clothing.

Importantly, Ohio also cannot recover from a Medicaid recipient's estate any assets that passed to the surviving spouse through joint ownership, most typically joint ownership of a home. In this situation, as in those described above, Medicaid estate recovery is not usually avoided completely, but the recovery process is deferred until the surviving spouse of the Medicaid recipient has passed away. In hardship circumstances, a permanent waiver may be granted depending on the situation.

Assets that are in the sole name of the surviving spouse, even if the Medicaid recipient used and enjoyed those assets during his or her life, are not subject to Medicaid estate recovery.

Protecting Your Family's Assets From Estate Recovery

Planning for the possibility that you may someday need Medicaid benefits can be complicated. On the one hand, you could place all of your assets in the name of a spouse or child, which would preserve them from Medicaid estate recovery. However, you have no guarantee that it will be you, not your spouse, who will need Medicaid, and placing assets in your children's names carries its own set of risks and problems. If you wait to transfer assets to others until it seems clear that you will need to go into a nursing home, you will very likely run afoul of Medicaid look-back laws.

In short, do-it-yourself Medicaid planning is fraught with pitfalls that could leave your family worse off in the end. The wisest course of action is to work, as early as possible, with an experienced Medicaid planning attorney to protect your family's assets while not jeopardizing your eligibility for assets.

If your loved one has already passed away and you are concerned about Medicaid estate recovery, contact an experienced Ohio probate attorney for guidance.

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Categories: Medicaid