Medicaid Estate Recovery


An often-misunderstood part of the Long-Term Care Medicaid Program is Estate Recovery. Estate Recovery is the program through which the State of Michigan attempts to recoup funds paid on behalf of a Medicaid beneficiary for long-term care expenses. Here are some answers to commonly asked questions:

How Does it Work?

While a person is receiving long-term Medicaid benefits, Medicaid keeps track of the amount of money spent on behalf of a beneficiary. After a Medicaid beneficiary dies, the person’s family is contacted to inquire into the remaining assets to determine if a claim is appropriate. Currently, the Department of Health and Human Services sends out a very detailed questionnaire to obtain this information.

The problem is, however, that some of the information requested on the questionnaire is irrelevant to a claim. Further, in many circumstances, due to how the deceased Medicaid beneficiary owned his or her assets, there may be no valid claim. That being said, in some situations, it is very important that the questionnaire is completed within the deadline established. As each situation is different, our office strongly recommends that you reach out to us for assistance with this process immediately if you are contacted.

Does Estate Recovery apply to all Medicaid Programs?

No, Medicaid Estate Recovery only applies to Long-Term Medicaid programs, (Nursing Home Medicaid and the Mi-Choice Waiver Program). In addition, the beneficiary must have been at least 55 years old, and have begun receiving services after September 30, 2007.

Can Estate Recovery be Avoided?

The good news is yes, with preplanning, Estate Recovery can be effectively avoided by taking steps to ensure that no assets pass upon the death of the Medicaid beneficiary through a Probate Estate. This means making sure that accounts have beneficiaries, and probably most importantly, that the home is properly addressed.

For most people, the most significant asset they own is their home. Under most circumstances, a specific type of deed, commonly known as a Ladybird Deed can be executed to allow the property to transfer to the intended beneficiary after the death of the owner without having to go through the probate process. Ladybird Deeds are growing in popularity not only when Medicaid Estate Recovery is at play, but also in other Estate Planning situations. The Ladybird Deed, which is also known as an Enhanced Life Estate Deed allows for the individual who owns the property to sign the deed during his or her lifetime. The deed provides that the individual retains the ownership rights, including the right to sell, convey or mortgage the property during his or her lifetime. If the individual still owns the property at the time of his or her death with a Ladybird Deed in existence, upon death, the property would pass to the recipient named in the deed. These deeds are used regularly to avoid Estate Recovery.

When is it too Late to Sign This Type of Deed?

One of the remarkable things about Ladybird Deeds is that due to the fact that the person retains ownership rights, executing this type of deed does not create problems for eligibility. Plainly put, a person can sign a Ladybird Deed, even if he or she is already in a nursing home and already on Medicaid. The bigger concern at that point is often whether the Medicaid beneficiary has the mental capacity to understand this type of arrangement. If not, an agent under a Durable Power of Attorney may also be able to sign a deed, if the document provides proper authority.

Like most Medicaid programs, there are a lot of specific rules and regulations, not all of which are addressed here. If you have any questions about a specific situation, do not hesitate to reach out to BLLH and ask. We’re here to help.