Certified Medicaid Planner Course - Strategic Marketing Partners, LLC SESSION 17 ESTATE RECOVERY

Transcription

1 Certified Medicaid Planner Course - Strategic Marketing Partners, LLC SESSION 17 ESTATE RECOVERY 1

2 History of Estate Recovery PRE-1993 ESTATE RECOVERY: Law was simple and not mandatory. States were given authority to collect from an estate, but collection was not required. Recovery limited to the patient s estate only. Patient had to be over 65. Recovery limited after death of patient s spouse. Estate not defined. 2

3 History of Estate Recovery 1993 TO 2006 ESTATE RECOVERY: Omnibus Budget Reconciliation Act of 1993 (OBRA 93) made dramatic changes to estate recovery. Age of recovery changed to over 55. Recovery now mandatory. Took an additional 14 years for states to comply. Estate definition left up to states can use probate or choose expanded definition. 3

4 History of Estate Recovery Medical assistance liens are authorized as a way for a state to collect against a patient or secure collection from the patient s assets. 4

5 History of Estate Recovery 2006 TO PRESENT ESTATE RECOVERY: Deficit Reduction Act allowed estates to adopt a Long Term Care Partnership Policy. State must be named as beneficiary of annuity (SPIA) for its creation to not cause a divestment penalty. 5

6 Estate Recovery Law Combination of all estate recovery laws passed to date are found in: 42 U.S.C. 1396p Each state has its own laws which take advantage of various movable parts in the federal law. Some states are super aggressive and some are more docile. 6

7 Breakdown of 42 U.S.C. 1396p Liens (a/k/a TEFRA liens)* Use of liens are not mandatory. States can use them to put a lien on property to secure state s recovery claim. Lien available after patient determine no reasonable likelihood patient will return home. State must give notice before placing lien. Patient has a right to appeal lien. *42 U.S.C. 1396p(a); liens were initially authorized by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Public Act No , 96 Stat. 370 (1982). 7

8 Breakdown of 42 U.S.C. 1396p Procedure for determining likelihood to return home not established at federal law. Some states create a presumption test many make automatic finding after 6 months. No lien on home if any of the following living in it: patient s spouse (i.e., Community Spouse).* patient s child < 21, blind, or disabled.** patient s sibling who had an equity interest in the home and resided in the home for at least one full year immediately before the patient s institutionalization.*** 8 *42 U.S.C. 1396p(a)(2)(A). **42 U.S.C. 1396p(a)(2)(B). ***42 U.S.C. 1396p(a)(2)(C).

9 Breakdown of 42 U.S.C. 1396p Allowable Recovery In the case of any pre-death liens placed on real property, recovery only allowed during the patient s lifetime when property subject to the lien is sold. All other recovery of benefits correctly paid is deferred to the patient s estate. Recovery limited to medical assistance correctly provided for nursing facilities services, home and community-based services, and related hospital and prescription drug services. 9

10 Breakdown of 42 U.S.C. 1396p Mandatory Recovery No recovery is required for benefits correctly paid except for those who are institutionalized or are 55 or older. Then only for nursing facilities services, home and community-based services, and related hospital and prescription drug services. NO RECOVERY FOR GENERAL MEDICAID. 10

11 Breakdown of 42 U.S.C. 1396p Delay of Recovery Federal law allows recovery only at a time when the patient s spouse, if any, is also deceased and then only if the patient is not survived by a child who is under the age of 21, blind, or disabled. Applies to recovery and to property subject to lien. Property with lien also delayed if: Resident sibling in home for 1 year prior to institutionalization; or Child living in the home for 2 years and providing care. 11

12 Breakdown of 42 U.S.C. 1396p Undue Hardship State must adopt undue hardship procedure. Additional HHS directive to limit recovery against native populations. States left with discretion on undue hardship criteria. 12

13 Breakdown of 42 U.S.C. 1396p Estate Scope Term estate must mean at least the probate estate. States allowed to adopt expanded estate definition. Limited to assets that patient had ownership interest at time of death which shifted ownership in ways other than probate. Limited to the patient s share at time of death. State must use broader term if uses LTCPP. 13

14 Breakdown of 42 U.S.C. 1396p Long-Term Care Partnership Program (LTCPP) The state can exempt additional countable assets. Dollar for dollar match (benefits v. exemption). Use of policy exposes patient to expanded estate definition. Based on trial partnership programs in 14

15 Breakdown of 42 U.S.C. 1396p Recovery From Community Spouses Estates Federal law would seem to exclude. States have taken different approaches. No claim is viable in the deceased recipient s estate because of the delay of recovery. With recovery being expressly limited to the recipient s probate estate in those states under the simplified estate definition, so long as a spouse survives the patient and the probate process, no recovery should be possible. 15

16 Breakdown of 42 U.S.C. 1396p Because statute delays recovery until after death of the surviving spouse, states have read that to allow recovery FROM estate of surviving spouse. Some states trace assets through to eventual recovery. States are all over the board on this (see state-bystate summary in Guidebook). 16

17 Breakdown of 42 U.S.C. 1396p Annuity Beneficiary Designations Additional mandatory recovery provision. State must be named as primary or as contingent beneficiary of a SPIA. Avoids divestment penalty. State makes claim to insurance company at owner s death. 17

18 Advocacy Probate and Non-Probate Estates During estate administration process, claims can be challenged and settled. Estate-Administration Guidance Medicaid recipients often have to jump through extra steps in the estate administration process. Claim Negotiation Claims can often be settled and negotiated, even claims against annuity contracts. Claim/Statute Challenge Not all claims are valid. Claims can be defeated for undue hardship. 18

19 Recovery Avoidance Probate Estate Avoidance When recovery limited to probate estate, use probate avoidance techniques. Keep probate estate non-existent or lean. Avoid Expanded Estate Assets Most states say what assets they go after and don t. Use this as a list of what to use or not use to protect assets. Plan Sooner Divest-and-wait strategies avoid recovery. 19

20 Recovery Avoidance Delay Estate Administration Some states limit claims to a period of time. Open probate estate after time to file claim has passed. Move the Patient (to another state) If a nearby state has lax recovery rules, consider moving the patient. States will generally give up claim if patient leaves state before death. 20

21 Recovery Avoidance Move the Patient (home) Return home extinguishes recovery lien. Home could be transferred without fear of recovery or divestment penalty. Hospice could provide end-of-life care at home. Divorce Before patient dies, divorce patient to avoid recover against spouse s estate. 21

22 Questions Questions???? 22