Posts Tagged ‘medicaid recovery’

No Expanded Estate Recovery!

We  blogged recently about the status of the legislation in New York expanding the definition of “estate” for Medicaid recovery purposes. This legislation would enable Medicaid to recover its costs from assets including those jointly held, life estates and even possibly retirement accounts.

We are very happy to report that the Governor and the Legislature have agreed to repeal the legislation expanding estate recovery.  They have also rejected a proposal to eliminate spousal refusal.

Medicaid recipients and future Medicaid applicants will benefit greatly from this repeal of expanded estate recovery and the continuation of spousal refusal.

Medicaid recovery in NY: Where are we?

Several months ago we blogged about New York’s emergency regulations which expanded the definition of “estate” for Medicaid recovery purposes. These regulations, allowing recovery from interests such as jointly held assets and life estate interests, enhanced Medicaid’s ability to recover its costs from a decedent’s estate.

The emergency regulations expanding the definition of “estate” expired last fall.  New York law referring to this expanded definition of “estate” is still in place without regulations to clarify what the new definition is.

We are hearing two possible alternatives going forward. The first is that final regulations will be issued effective for Medicaid recipients dying after July 1, 2012. These would be similar to the emergency regulations that have expired with some changes. The second alternative which we think is more likely is the elimination of the law expanding the definition of “estate” and going back to the original law. This would mean that for Medicaid recovery purposes, only assets passing from the decedent pursuant to a court process (probate or administration) would be available for recovery.

We will keep you posted as we know more about New York’s attempt to expand estate recovery.

A Retained Life Estate May No Longer Avoid Medicaid Recovery

A retained life estate is itemized in new Medicaid law and regulations as a type of non-probate asset now included in the definition of “estate” for Medicaid recovery purposes. Therefore, a deceased Medicaid recipient’s interest in a retained life estate may now be available for Medicaid recovery on the death of the Medicaid recipient.

The potential recovery of this interest was not anticipated when many parents even years ago transferred their home by deed to a child or children and retained a life estate.  We expect that Medicaid’s legal right to recover from a life estate interest will be challenged in court in the near future. However, we do not know what the results of that litigation might be and as of now the retained life interest is a recoverable asset.

The owner of a retained life estate may have options available to protect the life estate interest.  This will depend upon the individual’s particular situation.

A Sea Change in Medicaid Law in NY

On April 1, 2011, New York enacted changes to its Medicaid law by significantly expanding the list of estate assets from which Medicaid can recover its costs.  This is of course a huge concern for anyone contemplating or receiving Medicaid benefits.

Prior to this new law, Medicaid could only recover its costs from assets that passed from the deceased Medicaid recipient (or in some cases the spouse’s estate) through a court proceeding. The assets would have been in the sole name of the decedent.  Assets such as jointly held accounts, accounts with named beneficiaries, life estate interests passed directly to the beneficiary. That is no longer the case under this new law.

On September 8, 2011, the NYS Department of Health promulgated emergency regulations clarifying the new law and the assets now available for recovery.  The emergency regulations define an estate for recovery purposes as those assets passing by will or intestacy as well as “any other real and personal property and other assets in which the decedent had any legal title or interest at the time of death, including such assets conveyed to a survivor, heir, or assign of the decedent through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement, to the extent of the decedent’s interest in the property immediately prior to death.”

The regulations allow recovery from the estate of the deceased Medicaid recipient’s interest in a retained life estate even where the deed was executed many years prior.

The emergency regulations allow recovery from irrevocable trusts to the extent the decedent had an interest in the principal of the trust or was entitled to income from the trust that was not distributed prior to death.

We are working with these changes to develop the best planning options now available for our clients.