If you know anyone who receives long-term care services covered by Medicaid, it is highly likely that their estate will be subject to estate recovery unless specific actions are taken to prevent estate recovery. Estate recovery is the program through which the State of Michigan is paid back for Medicaid benefits provided to certain recipients upon the recipient’s death by allowing the state to recover property from the recipient’s probate estate. If the Medicaid recipient is still living, there are steps that can be taken to ensure their assets pass outside of a probate estate, allowing their heirs to entirely escape estate recovery.
In an ideal world, estate recovery wouldn’t be an issue for anyone because they would have taken the appropriate steps prior to death to ensure they wouldn’t have a probate estate. But in reality, many individuals die as long-term care Medicaid recipients and, for any number of reasons, own a homestead that must pass through probate. If you are the heir of an estate of someone who received long-term care Medicaid benefits prior to death, it will be helpful to know the following information.
The Michigan Court of Appeals recently held that all individuals who sign a Medicaid Application, DHS Form 4574, bearing a date on the bottom of the application of 10-11 (representing October 2011) or later, have sufficient notice that their estate may be subject to estate recovery upon death. In a separate case, the Michigan Court of Appeals also recently held that in order to receive a hardship waiver exempting you from estate recovery, one must file a Hardship Waiver Application within 60 days of the date on the “Notice of Intent to File a Claim and Request for Information” that is mailed to the family of the deceased Medicaid recipient by the Department of Health and Human Services. Often this Notice of Intent is mailed to the last known contact person (often the attorney or agent who filed the Medicaid Applications on behalf of the deceased). One of the most common hardship exemptions often sought is commonly referred to as the “home of modest value hardship exemption,” which refers to the situation where the value of the Medicaid recipient’s homestead is equal to or less than 50% of the average price of a home in the county in which the homestead is located. Besides these two Michigan Court of Appeals cases, there are currently several other cases on estate recovery pending before the Michigan Court of Appeals, several of which were recently consolidated. Until the dust settles, this area of the law is subject to both change and controversy.
Take Away 1: Living long-term care Medicaid recipients or their agents should take appropriate steps to ensure the Medicaid recipient’s assets pass outside of probate upon death.
Take Away 2: If you are the heir of a recently deceased long-term care Medicaid recipient, do not delay in determining whether you are eligible for a hardship waiver from estate recovery, and be certain to file a Hardship Waiver Application within the timeframe specified on the Notice of Intent to File a Claim and Request for Information sent by the Department of Health and Human Services to preserve the waiver.
This article is an update to a previous article published by Legal News & ICBA Briefs in April 2015.