During an estate planning consultation, I often have to explain the concept of a Medicaid Lien against an estate. Most people don't understand this concept but it is nevetheless an important one as it will substantially decrease the value of an estate and an heir's inheritance. I discuss this concept in my free e-book Strong which is available on my website.
Federal Law requires that all states seek recovery from Medicaid recipient’s estate for long term care benefits paid out. States are permitted to include real and personal property in which the recipient had a legal title or interest at death including assets conveyed by a will to a successor, or heir. 42 U.S.C. § 1396 (b)(4).
In 1994, Pennsylvania enacted its Estate Recovery Statute (62 Pa.C.S. § 1412). The law lets the Commonwealth of Pennsylvania pursue recovery for all nursing facility services, home and community based services and related drug services from a deceased’s person’s assets. The law also holds estate executors or administrators personally liable if they transferred property without satisfying a Department of Welfare (DPW) claim made pursuant to this law. The law requires that the executor or administrator determine whether the decedent received Medical Assistance during the five (5) years preceding death (the “5 Year Look Back”) and to give written notice to Pennsylvania Department of Welfare.
Here are 5 important points about Pennsylvania’s Estate Recovery Law
- The following assets are exempt:
- Property held in tenancy by the entireties (husband and wife), joint tenancy with right of survivorship (not Tenants in Common).
- Life insurance proceeds payable to a named beneficiary (other than the deceased) and certain trust assets.
- Pennsylvania will postpone a recovery claim against an estate until:
- Death of the surviving spouse
- Death of any child who is blind or totally and permanently disabled
- Date at which any surviving child becomes 21; or
- For a primary residence - The death of, the transfer by, or vacating the property by a sibling with an equity interest in the property who has occupied the home for at least one year prior to the recipient’s death
- You can apply for a Hardship Wavier if you can't afford to pay it
- DPW has the authority to grant waivers on a case by case basis. 55 Pa. Code §258.10
- A DPW Claim ranks in priority against other debts of the estate as follows: (20 Pa. C.S. §3392)
- Cost of Administration
- Family Exemption
- Cost of Decedent’s funeral, the cost of medicines furnished within six months of death, medical or nursing services, hospital services
- Cost of grave marker
- Rents for the occupancy of the decedent’s residence for six months prior to death
- Claims by the DPW
- All other claims
- In addition to nursing home care costs, Pennsylvania can pursue recovery for costs associated with the following programs:
- Home and Community Based Care Services
- LIFE Programs
- Home support, home health, personal care, transportation, attendant care, meals, social activities, recreation
For more great information on Estate Planning in Pennsylvania, I encourage you to keep reading my blog an dcall our office with questions