Medicaid estate recovery is the process by which Medicaid may seek to claim your assets for reimbursement after your death. This should not be confused with Medicare, which does not do estate recovery. But there are some things Medicare beneficiaries should know.
Medicare and Medicaid are two healthcare programs created by the U.S. government to ensure access to medical services. Medicare specifically covers people ages 65 years or older and those with qualifying chronic conditions or disabilities. On the other hand, Medicaid is typically offered to people living with lower economic means.
Read on to learn more about the relationship between Medicaid and Medicare and when estate recovery applies.
Federal law requires states to try to recover Medicaid costs for long-term care from the estates of enrollees ages 55 or older who have died. But some states also choose to recover costs for all other Medicaid services. This process is called Medicaid’s estate recovery program (MERP).
Your estate includes things like your house, savings, or retirement account registered in your name. Some states also include things like joint property and living trusts in this category. Some examples of estate recovery are putting a hold on the house or using money left in a trust for reimbursement.
Medicare does not have an estate recovery program like Medicaid. That said, Medicaid runs the federally funded Medicare Savings Program (MSP).
If you’re enrolled in Medicare and meet certain income requirements, you can receive help paying your premiums through one of four savings programs. These programs cannot be subjected to estate recovery by Medicaid.
In some states, you may be able to apply for the Medicare Savings Program without applying for full Medicaid, which means that Medicaid will not be able to claim your assets at all in the event of your death. Your state’s State Health Insurance Assistance Program (SHIP) can help you apply.
Medicaid estate recovery can significantly affect health equity. In the United States, long-term care can be very expensive. Medicare does not cover long-term (custodial) care, and private insurance companies also rarely cover it.
This means that estate recovery may affect more older adults of low economic means and those from disadvantaged groups who cannot afford to pay for their own long-term care and rely on Medicaid to cover it.
Generally, when someone passes away, their death has to be reported to Social Security. Unlike Medicaid, Medicare does not go after their estate.
Instead, depending on your relationship with the deceased, you may be eligible for a refund based on any prepaid, unused Medicare premiums.
The refund typically goes to the following people in order:
- legal representative of the deceased person’s estate
- surviving spouse who lived with the deceased or was entitled to monthly benefits on the same record
- children entitled to monthly benefits on the same record
- parents entitled to monthly benefits on the same record
- surviving spouse not included in the previous categories
- children not included in the previous categories
- parents not included in the previous categories.
That said, this refund is not automatic. To receive it, you have to fill out form SSA-1724. Because you pay for Medicare in advance by the quarter, you could be refunded for up to 3 months of payments.
If you have Part C (Medicare Advantage), the insurance company managing your plan will issue the refund after you fill out the same form.
Note that you may also be eligible for additional survival benefits from social security.
Which states have Medicaid estate recovery?
Due to the Omnibus Budget Reconciliation Act of 1993, every state has to have an estate recovery program.
However, some rules regarding what assets Medicaid can pursue and under what circumstances can vary from state to state. It’s a good idea to consult with a lawyer or your local Medicaid office to understand the rules in your state.
How do you protect your home from Medicaid estate recovery?
According to federal law, states cannot go after a house if the Medicaid recipient has a surviving spouse or a child who is under age 21 years or living with blindness or another disability.
The U.S. government created two programs to help people access healthcare: Medicare and Medicaid. Medicare is for individuals 65 years or older and those living with some chronic illnesses or disabilities. Medicaid is intended for those living with lower incomes.
When you pass away, Medicaid may ask for repayment through a process called Medicaid estate recovery. This is different from Medicare, which doesn’t do estate recovery. Instead, Medicare may offer you benefits as a surviving family member and reimburse any unused premiums.