An important benefit under the federal Medicaid system is payment of nursing home costs for eligible persons over the age of sixty-five. Although Medicaid is a joint program with state governments targeted for low-income citizens, the income eligibility guidelines are strictly based upon federal Medicaid law.
Meanwhile families recognize the tremendous financial burden that extended nursing home care imposes on the healthier spouse. To protect the family assets and lifestyle, these families may consult with an estate planning or Medicaid lawyer to structure their finances in a way that qualifies a family member for Medicaid should an extended nursing home stay be needed in the future. Families that anticipate the need for future nursing home care should not delay in their estate planning because a five-year look-back period exists under Medicaid eligibility laws. Qualification requires that you have virtually no assets and Medicaid benefits are typically denied if assets have been gifted from the estate during the five years preceding the application.
When the U.S. Congress passed the Omnibus Budget Reconciliation Act of 1993 it included a mandate on the states for a Medicaid estate recovery program. Under this Medicaid law, states must attempt to recover the cost of certain Medicaid benefits paid to an individual from their estate. These costs include nursing home or other long-term institutional services, home- and community-based services, as well as hospital and prescription drug costs incurred in conjunction with the nursing home stay.
States are in the best position to collect recovery monies since Medicaid benefits are paid by the state and state law governs probate of an estate. Probate insures that a deceased person’s estate is properly distributed and all remaining bills are paid, including, as in this case, reimbursement of Medicaid benefits.
However, the Medicaid reimbursement is not an automatic withdrawal from the deceased’s estate. Medicaid joins the list of claims against the estate which may include a home mortgage and taxes. Medicaid receives money only if there are funds available after other types of bills are paid based upon probate laws.
A home occupied by the surviving spouse or other qualified family members may or may not be considered as part of the estate, depending upon Medicaid law in each state. The good news is that federal Medicaid law prohibits estate recovery during the lifetime of the surviving spouse.
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