Estate Recovery Basics
Timothy M. Twomey, AAG
What is Medicaid?
Medicaid is a joint federal/state program that
pays for medical care for individuals who cannot
pay their own medical bills.
To qualify for Medicaid, an individual must have
limited income and resources. Medicaid
eligibility rules are complicated, and different
states apply different rules.
Each state operates its own Medicaid program,
consistent with federal law.
What is estate recovery?
OBRA '93 requires each state to recover the
costs of nursing facility and other long-term care
services from the estates of Medicaid
At a minimum, states are required to file claims
in probate court against the estates of certain
deceased Medicaid beneficiaries.
What exactly is an estate?
An estate is usually defined as all real estate
and personal property that passes from a
deceased person to an heir through a will or by
rules of intestate succession.
Property that passes directly to joint owners or to
beneficiaries under a trust is traditionally not
considered part of the probate estate.
However, OBRA '93 gives states the option to
expand the definition of estate to include these
types of interests and any other property that the
individual has any title or interest in at the time
Expanded “Estate” Definition
If a State chooses to define “estate” in a broader
context, recovery from some or all property that
bypasses probate may be possible.
Such property includes assets that pass directly
to a survivor, heir or assignee through joint
tenancy, rights of survivorship, life estates, living
trusts, annuity remainder payments, or life
Alaska’s Definition of Estate
Includes all real and personal property of
the decedent, trust, or other person whose
affairs are subject to the Alaska Uniform
Probate Code (AS 13.06-13.13) as
originally constituted and as it exists from
time to time during its administration.
Do states recover from the
estates of everyone who
No, but states must recover money spent on behalf of the following
1. Individuals who were age 55 or older when they received Medicaid.
A state must recover payments made for nursing facility services, home- and
community-based services provided under a Medicaid waiver, and related
hospital and prescription drug services; and
2. Individuals in nursing facilities, intermediate care facilities for the mentally
retarded, or other medical institutions who pay a share of cost as a
condition of receiving Medicaid and who cannot reasonably be expected to
be discharged and return home.
This provision requires that the state determine, after notice and an opportunity
for a hearing, that the individual cannot reasonably be expected to return home.
Can states go beyond these
Yes, states have the option to recover payments
for all other Medicaid services provided under
their state Medicaid plan for individuals age 55
These may include services such as home- and
community-based care for functionally disabled
persons, community-supported living
arrangements, optional personal care, and
mandatory home health care.
Who is Subject to Estate
Recoveries may only be made from the estates of
deceased recipients who were 55 or older when they
received Medicaid benefits or who, regardless of age,
were permanently institutionalized. However, states may
exempt recipients if their only Medicaid benefit is
payment of Medicare cost sharing (i.e., Medicare Part B
If a state has elected to impose TEFRA liens on
recipients’ homes, then it must also recover from the
estates of those recipients. States may impose liens on
property of Medicaid recipients of any age if they are
permanent residents of a nursing home or other medical
institution, and if they are expected to pay a share of the
cost of institutional care.
cannot reasonably be expected to be
discharged and return home
This provision requires that the state determine, after notice and an
opportunity for a hearing, that the individual cannot reasonably be
expected to return home.
What is permanent ?
In accordance with 42 CFR 433.36, the state
presumes that a client residing in a medical
institution for at least 120 consecutive days is
not reasonably expected to return home.
Transfers from one medical institution to
another do not interrupt the 120 day period
but discharge from a medical institution to a
community setting will terminate the 120 day
period. Re-admission to a medical institution
starts a new 120 day period.
Are there any exceptions to
Recovery cannot be made:
before the death of a surviving spouse;
if the individual has a surviving child who is under age
21 or who is blind or permanently disabled; and
against one's home on which the state placed a
lien, unless additional protections for siblings and
adult children are satisfied.
How does estate recovery work?
When the State determines that a client
cannot be expected to return home, or learns
of the death of a client, the case is reviewed
to determine the value of the estate, whether
there are heirs, and if it will be cost-effective
to proceed with recovery. Once the decision is
reached to place a lien on the estate, the
department provides written notice to known
representatives, heirs, or beneficiaries of the
State’s intent to proceed with collection on the
Written Notice - Content
The clients name, social security number, if known, date
of birth and date of death, if deceased;
How the term “lien” is defined;
That the individual will not lose ownership of their home
if a lien is imposed;
The amount of recoverable Medical Assistance correctly
paid on behalf of the client;
The department’s intent to file a lien against the client’s
real property to recover the applicable Medical
Assistance paid on behalf of the client.
Notice of Procedures
Notices also provide information on how to request a
hardship waiver and how to appeal the department’s
decision to proceed with recovery. Appeals may contest
the amount of recoverable medical assistance identified
by the department or whether the deceased client had
legal title to the real property at the time of the client’s
death. Appeals must be written, signed, and sent to the
Third Party Liability section of the Division of Health Care
Services within 30 days of the date of receipt of the
notice. Appeals must also include the reason for
contesting the Department’s decision and contact
information for the representative.
What about the surviving
During a spouse's lifetime, the state
Medicaid agency cannot require
repayment of Medicaid expenses.
However, after the spouse dies, the state
may file a claim against the spouse's
estate to recover money spent for nursing
home care, to the extent of the deceased
What is a lien?
A lien is a claim against a specific piece of real
estate. When the property is sold or title is
transferred, the lien must be paid.
For nursing home residents, the lien is the
amount of Medicaid payments made on behalf
of the persons receiving care. This amount
builds up the longer a person receives care.
A state Medicaid agency may not place a lien on a home
for benefits paid if any of the following relatives live in the
a minor child;
a permanently disabled or blind adult child; or
a brother or sister who has been residing in the home for
at least one year immediately before the Medicaid
beneficiary entered the nursing home.
Restrictions on Lien
There is a living spouse (no matter where he or she lives);
There is a child who is under age 21, or is blind or disabled (no
matter where he or she lives);
There is a brother or sister with an equity interest who lived in the
home for the year immediately prior to the nursing home admission
(but only if the sibling has continuously lived in the home since that
There is a non-disabled adult child who had lived in the home at
least two years immediately prior to a parent's admission to a
nursing home, and was providing care that delayed admission (but
only if the adult child has lived continuously in the home since that
Offspring Care Exemption
An exemption to estate recovery is made in cases where a son
or daughter can establish that they provided care to the
individual that enabled them to stay at home rather than in an
The adult child must provide documentation that they resided
with the parent for at least 24-months immediately preceding the
beneficiary’s admission into an institution and that they have
resided there continuously since the institutionalization began.
Documentation must establish that the adult child used the
beneficiary’s address as their mailing address, on their driver’s
license or voter registration, and that their address remained
unchanged throughout this entire time period.
Additionally, a parent’s or treating physician’s written statement
that the adult child’s presence in the home enabled the parent to
live in the community is accepted as proof of providing required
Waiver of Estate Recovery
States are required to establish procedures for
waiver of recovery in cases where undue
hardship would result.
Congress was particularly concerned about
situations where the property subject to recovery
is the sole income-producing asset of the
survivors, such as a family farm or family
business, or a homestead of "modest value," or
where other compelling circumstances exist.
Undue Hardship Waiver:
Applicants for undue hardship waivers must
have a beneficial interest in the estate and must
apply within thirty (30) days of receiving notice of
the Department’s claim. An application filed up
to thirty (30) days late may be treated as timely if
the applicant demonstrates good cause for filing
late. The filing of a claim by the Department in a
probate proceeding shall constitute notice to all
Undue Hardship Conditions
• The estate’s only asset produces income and recovery would cause
the survivors’ loss of livelihood;
• A survivor’s primary residence is the estate’s only significant asset and
state recovery of it would cause impoverishment of the survivor as
State recovery of estate’s proceeds would make the survivor eligible for
A survivor could discontinue eligibility for public assistance if they were to
receive the estate;
Recovery would deprive the survivor of food, clothing, shelter or other
necessities of life, or medical care, thereby endangering the survivor’s health
• The estate subject to recovery is a home of modest value defined as
50% or less of the average price of homes within the region or major
community, based on Alaska Department of Labor statistics and
periodically compared to census data adjusted for inflation. Home value
is determined as of the date of the recipient's death.
Other Waiver Conditions
• Low income Medicare beneficiaries who receive assistance from the Alaska Medical
Assistance Program only in the form of payment for their Medicare co-payments
and/or deductibles are exempt from estate recovery.
• Medicaid expenditures made for services that the recipient would not have been
required to pay for if the recipient were not eligible for Medicaid are exempt from
• Certain American Indian and Alaska Native income, resources, and property
(including rents, leases, royalties, usage rights, or income from them ) are exempt
from recovery if they are :
located on or near, or within the most recent boundaries of a current or prior federally
recognized or designated reservation,
derived from tribal lands,
related to natural resources (including their extraction or harvesting) derived from protected
tribal lands, if the protected source can be clearly traced;
held in trust status or judgment funds that are exempt from recovery by other laws and
originally protected assets and ownership interests that have been inherited, if the protected
source can be clearly traced;
ownership interests in or usages rights to items not covered above, with unique religious
spiritual, traditional, and/or cultural significance or rights that support subsistence or a
traditional life style according to applicable tribal law or custom.
The department will pursue a claim only if it determines that the
potential recovery amount would result in twice the administrative
and legal cost of pursuing the claim, with a minimum pursuable net
amount of $10,000.
In assessing the value of an estate, the department will consider all
other claims against the estate having precedence under state
statute. Administrative and legal costs include, but are not limited to,
the costs of:
a. advertising, filing, and exercising the lien,
b. legal representation of the state in court,
c. tracking property with potential for a lien and then tracking its subsequent
d. any and all costs associated with repair of the property to bring it into
e. insurance costs to protect the asset,
f. all costs associated with advertising, listing and selling the home including
any and all applicable closing fees.
47.07.055. Recovery of medical
assistance from estates
(a) The estate of an individual who received medical assistance payments is
subject to a claim for recovery of the medical assistance after the
individual's death that, except as provided in (b) of this section, may be
secured by a lien filed against the individual's real property during the
individual's lifetime if the
(1) individual was an inpatient in a nursing facility, intermediate care facility
for the mentally retarded, or other medical institution;
(2) department required the individual, as a condition of receiving medical
assistance under this chapter, to spend for medical expenses all but a
minimal amount of that individual's income; and
(3) department determined during the individual's lifetime, after notice and
opportunity for hearing, that the individual could not reasonably be expected
to be discharged from the institution and to return home.
(b) A lien may not be filed under (a) of this section against an individual's
home if the home is lawfully occupied by the individual's
(2) child under age 21;
(3) blind or disabled child as described in AS 47.25.615 (3) or (5) or 42
U.S.C. 1382(c); or
(4) sibling, if the sibling has an equity interest in the home and was residing
in the home for at least one year before the date of the individual's
admission to the institution.
(c) The state may not recover the costs of medical assistance under a lien
on a home under (a) of this section until after the death of the individual's
surviving spouse, if any, and only at a time when neither of the following is
lawfully residing in the home:
(1) a sibling of the individual who was residing in the individual's home for a
period of at least one year immediately preceding the date of the individual's
institutionalization and who has continuously resided in the home since the
institutionalization began; or
(2) a son or daughter of the individual who
(A) resided in the home for at least two years immediately preceding the
date of the individual's institutionalization;
(B) has continuously resided in the home since the institutionalization
(C) establishes to the department's satisfaction that the son or daughter
provided care to the individual that allowed the individual to reside in the
home rather than in an institution.
(d) A lien and claim authorized under (a) of this section are extinguished if,
during the individual's lifetime, the individual is discharged from the
institution and returns home. However, a new lien and claim are authorized
for subsequent expenses if the circumstances described in (a) of this
section occur after the individual returns home.
(e) In addition to recovery of medical assistance upon sale of property
subject to a lien authorized under (a) - (d) of this section, after an
individual's death, the individual's estate is subject to a claim for
reimbursement for medical assistance payments made on behalf of the
individual under this chapter for the following services to the extent that
those services were provided when the individual was 55 years of age or
(1) services received while an inpatient in a nursing facility, intermediate
care facility for the mentally retarded, or other medical institutions; and
(2) home and community-based services provided through a waiver
received from the federal government that allows home and community-
based services to be covered under this chapter for persons who are
(f) Other than a recovery upon sale of a home, a claim under this section
may be made only after the death of the individual's surviving spouse, if
any, and only at a time when the individual has no surviving child under age
21 and no surviving child who is blind or totally and permanently disabled.
(g) For purposes of AS 13.16.470 , the claims authorized under this section
are debts with preference under the laws of the state.
Tim Twomey, Assistant Attorney General
Department of Law (907)269-5168
Caitlin Shortell, Assistant Attorney General
Department of Law (907)269-8494
Recipient Help Line
If you are a recipient or a recipient
advocate and have questions about
Medicaid coverage, please call toll free 1
(800) 780-9972 statewide Monday through
Friday between 8 a.m. and 5 p.m.