Medical Assistance and Protecting Property After You Die

When an individual is receiving Medical Assistance in order to pay for their nursing home services or home and community based services and then passes away, his or her property could be at risk to the Estate Recovery Program. The Estate Recovery Program empowers Pennsylvania (through the Department of Human Services) to recover payments made on behalf of an individual who was age 55 years or older when he or she received nursing facility services, home and community based services, or related hospital and prescription services paid by Medical Assistance. However, Pennsylvania can only be repaid from the Medical Assistance recipient’s (“recipient”) probate estate and only up to the amount of Medical Assistance paid for the above services for the recipient.

A probate estate consists of property that is in one person’s name alone when he or she passed away and it did not have a beneficiary, other than the estate, designated on the property.  Jointly owned property falls outside of the probate estate and would thus not be estate recoverable. Therefore, one easy way to avoid estate recovery would be to add a trustworthy person as an owner to the recipient’s bank account.

A recipient’s primary residence is vulnerable to Estate Recovery (assuming that is in that person’s name alone). However, the Department of Human services (“Department”) will waive its claim in cases of undue hardship. The Department will find that an undue hardship exists when the person requesting the undue hardship waiver meets certain requirements. The person requesting the waiver must have continuously resided in the primary residence of the recipient and provided care or support to the recipient either so he or she could remain at home for at least 2 years immediately before the recipient received nursing facility services or for at least 2 years during the period of time for which Medicaid-funded home and community based services were received. The person cannot have an alternative permanent residence. If the recipient is still living and the caregiver was living with the recipient prior to their entrance into the nursing home, there is another exception that could apply during the recipient’s life. If this sounds like you or a loved one who is caring for someone, then you should contact an Elder Law Attorney for more information as to how you can preserve the family home.

Income producing property, such as a family farm, family business or rental property, is also at risk. The Department will waive its claim on an income-producing asset if the recipient’s spouse, child, parent, sibling or grandchild used the asset to generate their primary source of income for the household or if there would be a gross family income of less than 250% of the Federal poverty guideline without use of the asset.

As for the recipient’s bank accounts, it can be confusing when we talk about how much the recipient is allowed to have in his or her bank account. In some cases an individual can have $8,000 in resources and still be eligible for Medical Assistance. The $8,000 is then vulnerable to the Estate Recovery Program, assuming that at the time of the recipient’s death it was in an account in the recipient’s name alone without a designated beneficiary. The Department will waive their claim on an administered probate estate worth $2,400 or less if there is an heir. Thus, even though in some cases a recipient can keep up to $8,000 in assets, the recipient should try to keep his or her assets at $2,400 or less in order to avoid Estate Recovery.

This article is focusing on protecting property after a recipient passes away; however, in some cases you can protect assets while the person is living or even before they begin receiving Medical Assistance. The suggestions in this article are not right for every individual. You should seek the advice of an Elder Law Attorney before making any changes to your legal and financial matters.

Jessica F. Greene, CELA,* LL.M. in Elder Law

* Certified as an Elder Law Attorney by the National Elder Law Foundation, as authorized by the Pennsylvania Supreme Court

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