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Unexpected Medicaid Estate Recovery Hiccup (Part 2)

Last week I started to tell you about the Medicaid estate recovery process in which the State attempts to recover from the estates of deceased Medicaid recipients, benefits it paid out. The process is usually pretty routine. The State runs a printout, which shows the dates and amounts it paid. When a Medicaid recipient is in a facility, the cost charged by the facility is at a reduced Medicaid rate. Additionally, the Medicaid beneficiary must apply most of his or her income to the cost, so the State rarely pays the full amount of that rate.

In order to be Medicaid eligible, an applicant must have less than $2000 in assets to his or her name so you would think that the State’s effort to recover money is a fruitless effort. There are, however, many ins and outs to the Medicaid regulations. In our particular case, because our client was under age 65, we were able to place his home into a special needs trust without spending it down towards care at the much higher private pay rate.

This strategy allowed him to qualify for Medicaid’s reduced rate. After death some of the proceeds from the sale of that home must be used to pay back the State but the rest can be passed to his children as an inheritance. What came back from the State, however, was a number that was 3 times what we expected.

Next week I’ll tell you why and what we needed to do to correct the mistake.