Alaska Medicaid Estate Recovery Basics

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					   Alaska Medicaid
Estate Recovery Basics

    Timothy M. Twomey, AAG
         (907) 269-5168
          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
  of death.
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
  insurance payouts.
 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
          receives Medicaid?
 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
  and older.
 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
       estate recovery?
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
 beneficiary's interest.
             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.
              Lien Exceptions
 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 spouse;
  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
  defined below:
     State recovery of estate’s proceeds would make the survivor eligible for
      public assistance;
     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
      and safety.
 • 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.
                 Cost Effectiveness

 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
          saleable condition,
         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.
              47.07.055 continued
 (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
 (1) spouse;
 (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.
              47.07.055 continued
 (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
   began; and
 (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.
              47.07.055 continued
 (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
             47.07.055 continued
 (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.
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