Through the Medicaid Estate Recovery program, federal regulations allow states to attempt to recover some long-term care, hospital, and medication costs from an individual’s estate after their death.
Medicaid is a Social Security program that the state and federal governments run to support medical costs for people with limited means and resources. Although they must follow federal guidelines, states have separate programs with different rules and practices.
The program pays for services such as nursing home and personal care, and people with Medicaid may owe small copayments for some services. People usually qualify by proving they meet a certain income threshold.
In the Medicaid Estate Recovery program, states reclaim funds spent after a certain age through a person’s assets after they die. Different states approach this in various ways. This article explains what to expect and where to look for support.
Glossary of Medicare terms
- Out-of-pocket cost: This is the amount a person must pay for care when Medicare does not pay the total amount or offer coverage. Costs can include deductibles, coinsurance, copayments, and premiums.
- Premium: This is the amount of money someone pays each month for Medicare coverage.
- Deductible: This is an annual amount a person must spend out of pocket within a certain period before Medicare starts to fund their treatments.
- Coinsurance: This is the percentage of treatment costs that a person must self-fund. For Medicare Part B, coinsurance is 20%.
- Copayment: This is a fixed dollar amount a person with insurance pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicaid estate recovery works by using a Medicaid beneficiary’s estate to pay off medical debts before the estate passes on to any surviving relations.
A person’s estate includes assets that are only in an individual’s name, which might include:
- a house or other property
- savings
- a retirement account
Different states define recoverable assets differently but may include other items, such as jointly owned property. If an individual has no assets, the state will not ask the individual’s heirs for repayment.
Through a provision called spousal impoverishment, the state also affords certain protections to the assets of any beneficiaries who have a surviving spouse. This allows a spouse to continue living independently despite the recovery by the state. In 2024, this provision totals $154,140.
Any Medicaid beneficiary ages 55 years or over who receives Medicaid benefits is usually liable for estate recovery, as are beneficiaries of any age who permanently enter a care institution.
However, there are some exceptions. Medicaid Estate Recovery programs will not try to recover from people who qualify for a Medicare savings program (MSP) or are qualified Medicare beneficiaries for whom Medicare paid premiums and coinsurances.
These programs provide benefits based on a person’s income, and include the following:
Learn about Medicare and Medicaid dual eligibility.
The Medicaid Estate Recovery program can put a lien on the property, meaning they may recover some debt using the value of any property the beneficiary owned.
Medicaid can lien an individual’s property while they are still alive if an enrollee has not correctly claimed Medicaid benefits or if they enter an institution such as a care facility permanently, except for situations in which the following people still live at the property:
- the enrollee’s spouse
- any children under age 21 years
- any blind or disabled children of any age
- a sibling with equity in the home
The state must then take the lien away after the facility discharges the enrollee and they return to their home.
Every state has a legal obligation to try to reclaim Medicaid costs. As a result, each state has some form of Medicaid Estate Recovery program.
People can speak to their local Medicaid office for more information on how their local Estate Recovery program works.
States have different regulations regarding Medicaid Estate Recovery programs. For example, states must establish procedures for waiving the estate recovery process when people meet the definition of “undue hardship.”
States may also define “estate” differently, according to the nonprofit organization Triage Cancer.
Some states use the federal definition of “estate,” meaning they may only recover assets that go through probate after a person’s death. Other states can claim some or all property that a survivor, heir, or joint tenant inherits.
For example, these might include property that passes from a deceased person to their estate’s beneficiaries through life insurance payouts or living trusts.
Each state develops and sends out information on the recipient’s rights, as well as the state’s.
The rules of each Medicaid Estate Recovery program differ, and a person may need support to understand what the program can recover against Medicaid debt and the survivors’ level of protection.
The following points of contact can help a person navigate Medicaid estate recovery:
- the local Medicaid office
- the nearest legal aid office providing support for people in the United States with low incomes through organizations such as the Legal Services Corporation
- the state’s Estate Recovery program support line or website, which many states offer
- the local State Health Insurance Assistance Program (SHIP), which can help people apply for MSPs
Medicaid can recover medical costs through its Medicaid Estate Recovery program.
After a person’s death, the state may attempt to recover any medical expenses from the individual’s estate, meaning assets in their own name, before the estate passes to their heirs. This might include property or a savings account. Different states have different rules.
People in an MSP are exempt from Medicaid recovery. A spousal impoverishment provision also means that the program does not collect the total Medicaid debt of those with a surviving spouse, leaving an amount of $154,140 in 2024 to support the spouse’s independent living.
An individual should speak with a local Medicaid office, low income legal aid office, Estate Recovery program support line, or the nearest SHIP office to understand their rights and liabilities around Medicaid estate recovery.