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Many rely on Medicaid to cover things like the often substantial cost of long-term care. A need-based program, Medicaid benefits are only available to those with limited assets and financial resources that fall below the qualification limits. With proper planning, a person can plan to qualify for Medicaid without having to spend down a lifetime of savings first. Medicaid planning, however, should also take into account Medicaid Payback as Medicaid will seek repayment for benefits distributed from a person’s estate.
Do You Have to Pay Back Medicaid in New York?
Family members morning the loss of a loved one may be more than surprised when they receive notice from the Medicaid Estate Recovery Program (MERP) that requests payment for benefits their deceased loved one received prior to passing away. This bill stands to take a huge chunk out of the value of the deceased’s estate.
Medicaid does require that the program be reimbursed from any assets which remain at the death of a benefit recipient. Medicaid, a federal program that is administered at the state level, requires repayment in every single state although the Medicaid Payback process and details can vary from state to state. While the deceased individual may have put plans in place to qualify for Medicaid, without the proper plan, Medicaid benefits will turn into a zero-interest loan from the government. Generally speaking, Medicaid will seek repayment for anything it paid for after a person reaches the age of 55.
The goal of MERP is to recover the funds Medicaid expended on behalf of a beneficiary. It is an unfortunate misconception that most people think that a loved one receiving Medicaid benefits is receiving these benefits free and clear. Later, after the loved one passes away and the estate is hit with the Medicaid Payback bill, the reality of the situation can become all too clear.
In some cases, however, the payback bill may be a nonstarter. After all, Medicaid is intended for those in lower-income brackets that have limited financial resources and assets. If a person does not have any assets when they pass away, Medicaid has nothing to recover from. Medicaid is barred from going after the assets of family members or of the children of the deceased. The government can only pursue assets in which the Medicaid beneficiary held an interest at the time of death.
In New York, Medicaid can only recoup that which it has paid out from the estate of the deceased Medicaid beneficiary. Under New York law, for these particular purposes, an estate refers to the real and personal property as well as other assets of the deceased that pass under the terms of their Last Will and Testament. In the absence of a will, estate refers to those assets that pass via the state’s intestacy laws. This means that several notable assets will not be includable in the Medicaid repayment process. Assets held jointly with rights of survivorship, payable on death and transfer on death accounts with listed beneficiaries, life insurance with listed beneficiaries, retirement accounts with listed beneficiaries, and most trusts will not be included in the assets Medicaid is allowed to go after in seeking repayment. Laws pertaining to these things, however, are subject to change and should be closely monitored.
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Talk to the dedicated team at Merlino & Gonzalez about your Medicaid, Medicaid planning, and long-term care planning questions. We have answers for you. Contact us today.