Your Guide To - Medicaid Estate Recovery

Arkansas Department of

Human Services

Your Guide To

Medicaid

Estate

Recovery

In Arkansas

Page 2

Table of Contents

What is Estate Recovery? 3

Who does it affect? 4

What is a HCBS Waiver Program? 4

What is an estate? 4

What do heirs pay? 5

What are the exceptions? 5

Is there exempt property? 6

How does it work? 7

What is Undue Hardship? 7

Does Medicaid take your house? 8

Nursing home residents under age 55? 9

What about QMB? 9

What about property in another state? 9

Long-term care in another state? 10

Affect of wills on estate recovery? 10

What if I transfer assets? 10

Qualified LTC Partnership Policy? 11

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What is Medicaid Estate Recovery?

Medicaid is a government program that pays

for healthcare for people with limited income

and assets. One type of service that Medicaid

pays for is long-term care services. Long-

term care services assist persons in need of

help with activities of daily living. Medicaid

pays for long-term care services in the per-

son’s own home or for residents living in

Level II Assisted Living Facilities, Intermedi-

ate Care Facilities for the Mentally Retarded

(ICF/MR) and nursing homes. The Medicaid

programs that pay for long-term care services

at home are called home and community-

based services waivers.

To help pay for the long-term care services,

every state is required by federal law to have

a Medicaid Estate Recovery program. If you

received Medicaid long-term care services,

the Arkansas Department of Human Services

(DHS) is required to file a claim against your

estate upon death. In some cases, DHS may

not pursue the claim, and the state will never

pursue a claim for more money than it paid

for your long-term care services.

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Who does estate recovery affect?

Estate recovery applies only to:

 Individuals age 55 or older who received

Medicaid in a nursing home or Intermedi-

ate Care Facility for the Mentally Retarded

(ICF/MR) or in a home and community-

based waiver program; and

 Individuals under age 55 considered per-

manently institutionalized in a nursing

home or ICF/MR.

What is a Home and Community-Based Waiver

Program?

Medicaid programs that allow individuals in

need of long-term care services to receive

them at home or in the community. In Arkan-

sas, these programs currently include the

DDS/ACS Waiver, ElderChoices, Alternatives

for Adults with Physical Disabilities and Liv-

ingChoices (Assisted Living Facility Waiver).

What is an estate?

An estate is property, such as money, a house,

a lawsuit settlement or other things of value

that a person leaves to family members or

others (heirs) when he or she passes away.

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What will the heirs to the estate have to pay?

The amount of the estate recovery claim is the

amount Medicaid paid for long-term care ser-

vices for the recipient after the Medicaid re-

cipient reached age 55, or younger if deter-

mined permanently institutionalized. If the

total of the claim exceeds the value of the es-

tate, heirs will not be liable for the balance.

Are there times when the state will not pursue a

claim against the estate?

Yes, the state will not pursue a claim when:

 There is a spouse who is still alive.

 There is a child under 21 years of age.

 There is a child of any age who is blind or

disabled. This child did not have to live

with or be dependent on the recipient at

the time of their death.

The state may also choose to waive its claim

if the DHS Hardship Waiver Committee de-

termines that:

 Recovery will create an undue hardship

for other surviving family members, or

 Recovery is not cost effective

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Is there property that the state will not collect

on?

Yes, these may include:

 A home, when:

 There is a son or daughter currently

living in the home and was living in

the home for at least two years be-

fore the recipient entered the nurs-

ing home and who provided care to

the recipient which permitted the

recipient to live at home longer.

 There is a brother or sister currently

living in the home and who lived in

the home for at least one year before

the recipient entered the nursing

home.

 Assets that pass directly to a benefici-

ary independently of the probate proc-

ess. Some examples of this may in-

clude:

 Insurance policy proceeds

 Retirement Accounts, such as IRAs

 Pension plans

 Mutual funds

 Deferred compensation plans

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How does Estate Recovery work?

When a person applies for Medicaid long-

term care services, DHS provides a notice

that explains estate recovery. When the per-

son dies, DHS will determine if estate recov-

ery is appropriate, file a claim and explain

how the representative may request an undue

hardship waiver.

What is Undue Hardship?

Estate recovery may be waived if recovery

would result in undue hardship for the heirs

of the estate. The representative of the estate

will receive a notice of estate recovery at the

death of the recipient which provides instruc-

tions on how to apply for an undue hardship.

The DHS Hardship Waiver Committee will

determine if undue hardship exists. The com-

mittee considers the following in making their

determination:

 The estate asset subject to recovery is

the sole income-producing asset of the

beneficiaries of the estate;

 Without receipt of the proceeds of the

estate, a beneficiary would become eli-

gible for federal or state benefits;

(continued)

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Undue Hardship (continued)

 Allowing a beneficiary to receive the in-

heritance from the estate would enable a

beneficiary to discontinue eligibility for

federal or state benefits;

 The estate asset subject to recovery is a

home with a value of fifty percent (50%)

or less of the average price of homes in

the county where the homestead is lo-

cated; and

 Other compelling circumstances.

If the representative doesn’t agree with the

committee’s decision, they may file an appeal.

Is it true that Medicaid takes your house when you

enroll?

No, Medicaid does not “take” nor put a lien

against a recipient’s home while he or she is

alive. When the recipient dies and it is deter-

mined that estate recovery does apply; DHS

will file a claim against the estate. The judge

will then decide what will have to be paid to

DHS. If it doesn’t go to probate, DHS will is-

sue a demand notice with the county clerk’s of-

fice. This will require the county clerk to notify

DHS if the house is sold or goes to probate, at

which time DHS will file a claim.

My husband is 45 years old and has been in an

accident. His doctor wants him to move to a

nursing facility for about 3 months for rehab ser-

vices. If we apply for Medicaid, would he be sub-

ject to estate recovery?

No, since your husband is under age 55 and

his stay in a nursing home is considered tem-

porary (not permanently institutionalized),

estate recovery would not apply to him.

I’m receiving QMB Medicaid. Does that mean

estate recovery will apply to me?

No, QMB or other Medicare Savings catego-

ries do not provide long-term care services, so

estate recovery would not apply to you.

Is property that I own in another state exempt

from recovery?

Not necessarily. Any property you own, re-

gardless of location, can be part of your estate

and subject to recovery.

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Page 10

If I receive long-term care services in another

state as well as Arkansas, which state will file a

claim?

Both states may file a claim. The probate

court will determine how to divide the estate

between the competing claims.

I want to will my home to my children. Can the

state still take it?

A will does not protect your home from estate

recovery. All claims against an estate, includ-

ing Medicaid estate recovery claims, must be

paid before property can be distributed as

specified in a will.

What if I transfer all my assets now to avoid es-

tate recovery?

Medicaid has very strict penalties in regards

to transferring assets. Giving away, selling

for less than fair market value, or restricting

your access to any type of property or finan-

cial instrument may cause you to be ineligible

for Medicaid long-term care coverage for

months or possibly for up to five years based

on the total amount of the transfer and ser-

vices requested. Before making any changes

to your assets, it would be best to consult an

attorney.

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I have assets protected through a Qualified Long

-Term Care Insurance Partnership Policy. Will it

be subject to Estate Recovery?

No, any disregarded assets under a Qualified

Long-Term Care Partnership Policy remain-

ing at the death of the policyholder is exempt

from estate recovery. Any other assets not

disregarded through a Qualified Long-Term

Care Insurance Partnership Policy will be

subject to estate recovery.

This publication was produced for informational

purposes only and should not be construed as legal

advice. The information in this publication was cor-

rect at the time of its printing, but laws and rules can

change. This book is not a legal document. It is a

guide, not a contract. DHS is not responsible for

information in this guide that is no longer correct.

If you have additional questions about Medicaid

Estate Recovery or need advice concerning estate

planning, please contact an Elder Law attorney.

If you need this publication in a differ-

ent format, such as large print, contact

your DHS county office.

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