Estate recovery is something I am asked about frequently when it comes to Medicaid, although families rarely pose it in those terms. The question, or some variation of it, goes as follows: “Will Medicaid put a lien on my home?” What we are talking about is the State of New Jersey’s ability to seek reimbursement for benefits it paid out on a Medicaid recipient’s behalf. The law only allows the State to assert the lien after the Medicaid recipient dies.
The elective share, on the other hand, is something that families rarely if ever ask me about, simply because the general public is not aware of it. However, where the Medicaid recipient is married and the spouse is not a Medicaid recipient, the question I am asked is “Must that spouse leave the Medicaid spouse anything in his/her will?
The answer to that question is impacted by the elective share, a state law that is intended to protect a surviving spouse from being completely “cut out” of a spouse’s will. In New Jersey, unless the surviving spouse knowingly waives this right, (s)he is entitled to 1/3 of the deceased spouse’s estate less what (s)he already has.
A surviving spouse has 6 months to assert a right to an elective share . If the spouse does not, Medicaid treats the waiver of that right as a transfer for less than fair value. It is that waiver which then results in a Medicaid penalty. Medicaid says, in effect, that the surviving spouse has given that money away, causing a Medicaid penalty. (S)he had a legal right to that money which (s)he chose not to assert.
A case decided by a New Jersey appellate level court last week involved a family that tried to avoid the application of the elective share statute so as to keep an inheritance and at the same time keep Dad on Medicaid. Next week I’ll share with you the details of that case.