Ultimate Guide to Medicaid Estate Recovery In Pennsylvania

By Robert C. Gerhard, III, Certified Elder Law Attorney

Pennsylvania’s Medicaid Estate Recovery Program has reclaimed over $500 million from deceased Medicaid recipients’ estates. By federal mandate, the state seeks repayment from probate estates, sometimes surprising surviving families.

Not all estates face recovery; several exceptions can prevent it. With effective Medicaid and asset protection planning during one’s lifetime, as well as posthumous legal strategies, estate recovery may sometimes be avoided. Attorney fees can be prioritized ahead of recovery claims, enabling executors to access legal support.

For tailored advice, contact our office for a consultation. Reasonable legal fees are considered permitted estate expenses, paid before estate recovery claims, ensuring you get the guidance needed. For more information, explore our comprehensive blog article on the Pennsylvania Medicaid Estate Recovery Program.

Disclaimer: We recommend that you have ongoing legal advice from an elder law attorney to navigate Medicaid estate recovery claims. This guide is meant to provide general information and does not constitute legal advice. If you wish to secure our services, please contact Gerhard & Gerhard, P.C.

• What Is the Pennsylvania Medicaid Estate Recovery Program
• Which Assets are Subject to Estate Recovery
• Executor Duties In Estate Recovery: How To Find Out the Amount of Pennsylvania’s Medicaid Estate Recovery Claim?
• Estate Recovery Claims and Priority of Payment Where the Estate is Insolvent
• Pennsylvania-Medicaid-Estate-Recovery-Exceptions
• Can Pennsylvania’s Medicaid Estate Recovery Program Take the House?
• How to Avoid Medicaid Estate Recovery In Pennsylvania
• How Do I Learn More about the Medicaid Estate Recovery Program
• Get Expert Legal Services From Gerhard & Gerhard, P.C.

What Is the Pennsylvania Medicaid Estate Recovery Program

The Pennsylvania Medicaid Estate Recovery Program is a state-administered initiative mandated by federal law to recoup the cost of long-term care services paid by Medicaid by collecting from the estates of deceased beneficiaries. 

This program targets probate assets of individuals over the age of 55 and seeks reimbursement for Medicaid long-term care expenses incurred on their behalf, such as nursing home care and home-based services. The recovery is used to replenish state and federal resources while certain exceptions and strategic planning options may help mitigate or avoid recovery efforts.

Which Assets are Subject to Estate Recovery

In Pennsylvania, estate recovery applies to Medicaid benefits used for long-term care services by individuals over 55, as benefits received prior to this age are not recoverable. 

Services Subject To Estate Recovery

Recovery efforts reclaim benefits paid for:

• Nursing facility care
• Community-based services, such as those under the Community HealthChoices Waiver Program
• Related medical costs

Probate Property Subject To Estate Recovery

Only probate property is subject to recovery. This includes assets within the deceased’s probate estate managed by a personal representative, regardless of whether they’ve been administered. Here are examples of probate property assets subject to estate recovery:

• Decedent’s Residence: Real estate titled in the decedent’s sole name is probate property subject to the Medicaid payback. The proceeds of real estate constitute the majority of funds recouped by the estate recovery program.  
• Life Insurance Benefits: Life insurance benefits payable to the decedent’s estate are subject to recovery, unlike those with directly named beneficiaries.
• Bank and Care Accounts: Accounts without a designated beneficiary are considered probate property. Those funds paid to families under legal statutes, including patient care funds, are subject to estate recovery claims, as are excess funds from funeral reserves.

Non-Probate Assets Exempt From Estate Recovery

Non-probate assets exempt from estate recovery claims include:

• Trust assets
• Trusts for disabled persons
• Life insurance proceeds to beneficiaries
• Jointly owned property with survivorship rights
• Irrevocable funeral reserves to the extent used for burial expenses

To ensure your estate is protected, reach out to Gerhard & Gerhard, P.C. Our comprehensive guide offers in-depth information and professional advice tailored to your situation. 

Read The Full Guide: What Assets are Subject to Estate Recovery?

Executor Duties In Estate Recovery: How To Find Out the Amount of Pennsylvania’s Medicaid Estate Recovery Claim?

In Pennsylvania, executors must identify estate recovery claims by contacting the PA Department of Human Services. Executors are directly responsible and must ensure creditor claims are properly addressed before asset distribution to avoid personal liability.

Executors need to determine whether a decedent received Medicaid long-term care benefits in the 5 years prior to death. If so, they must notify the Estate Recovery Program and request a claim statement; failure to do so risks personal liability.

The Estate Recovery Program has 45 days to respond to the Executor once they receive a request for a statement of claim that complies with applicable rules. Essentially the rules require the Executor to provide information necessary for the Estate Recovery Program to find the decedent in their system and prepare a statement of claim. They ask for information such as date of birth, social security number, etc. If the Estate Recovery Program fails to respond timely, their claim can be forfeited, and the estate in that situation would not have to pay the estate recovery claim.

Though rare, forfeiture of the claim does occur. For that reason, Executors should make sure their request for a statement of claim is compliant with applicable regulations, and they should save documentation that they sent the request to the proper address. One way to contact their office is by email, at ra-pwestate-support@pa.gov, but we recommend that you only do so with the help of a knowledgeable estate attorney so you know your legal rights and responsibilities.   

Read The Full Guide: How Do I Find Out the Amount of Pennsylvania’s Medicaid Estate Recovery Claim?

Estate Recovery Claims and Priority of Payment Where the Estate is Insolvent

In Pennsylvania, the Medicaid Estate Recovery Program seeks repayment from the estates of deceased Medicaid recipients for certain long-term care services. 

When an estate lacks sufficient funds to cover all debts, the personal representative must follow Pennsylvania’s order of priority for how available funds must be distributed:

• Estate Administration Expenses: These include probate filing fees and reasonable legal fees. Executors can hire legal help to avoid personal liability and ensure proper handling of recovery claims. The executor is also permitted to be paid a reasonable fee for stepping up to do the work of administering the estate. 
• Family Exemption: $3,500 designated for family needs.
• Funeral and Medical Costs: Includes funeral costs, medical services, and other essential expenses within six months of death.
• Gravemarker Costs: The expense of marking the grave.
• Residence Rent: Rent for the six months before death.
• Claims by Government Entities: Claims by the Commonwealth and municipalities.
• Other Claims: Includes all remaining claims, such as those by the Commonwealth.

Read The Full Guide: Estate Recovery Claims and Priority of Payment Where the Estate is Insolvent

Pennsylvania-Medicaid-Estate-Recovery-Exceptions

Pennsylvania’s Medicaid Estate Recovery only targets long-term care benefits. Certain exceptions may apply, often due to undue hardship, including, but not limited to:

Caregiver Exception

Waivers may apply for recovering against a decedent’s home if caregivers helped prevent nursing home placement for two years or more, or provided care and support for the decedent for two years while the person was receiving home-based long-term care services. The caregiver must have lived in the home for the two-year period prior to nursing facility entry or during the home services period, and must sign an affidavit verifying that they have no alternative permanent residence. 

Income-Producing Property

Claims may be waived for income-generating property if it’s vital for a spouse, child, sibling, or grandchild’s household income. This exception applies when the family’s income would otherwise fall below 250% of federal poverty guidelines, including assets like a family farm, business, or rental property.

Home Maintenance Expenses

Waiver is possible when someone other than a creditor has paid reasonable expenses to maintain the decedent’s home, encompassing taxes, utilities, and necessary repairs to keep the home suitable for return or fair market sale, such as lawn maintenance. 

Small Estates

Estates valued at $2,400 or less are not pursued by the Department.

Can Pennsylvania’s Medicaid Estate Recovery Program Take the House?

When a Medicaid long-term care beneficiary in Pennsylvania passes away, their estate, often the home, becomes the focus of the state’s Estate Recovery Program. Here’s an outline of what to expect and how to proceed:

1. Initial Contact: The Estate Recovery Program contacts the next of kin, often the person who aided the deceased in applying for Medicaid benefits. (At this point you should call an estate attorney who is familiar with estate recovery matters. Contact your attorney before responding to this inquiry.)
2. Check for Exceptions: Recovery can be waived, postponed, or determined non-applicable under certain conditions, such as when a surviving spouse resides in the home, if the home is jointly owned with survivorship rights, or is titled with a life estate deed. Homes may also be protected for disabled children, or caregivers, or certain siblings who lived in the home.
3. Seek Legal Guidance: Before agreeing to act as executor, consult a lawyer. Executing responsibilities incorrectly can lead to personal liability. Estate administration expenses, including reasonable legal fees, take precedence over recovery claims. .
4. Executor Responsibilities: If appointed, the executor must notify the Estate Recovery Program to request a claim statement. The claim should then be provided to the estate within 45 days; if delayed, the state’s claim for payback might be forfeited. The obligation is on the executor to contact the Estate Recovery Program, they do not have the obligation to find the executor. 
5. No Executor?: If no family member agrees to serve, the state may appoint an attorney to manage the estate, but they prefer to work with family when possible.
6. Timely Sale: Executors must sell any real estate promptly to satisfy recovery claims. Undue delay could result in court actions or replacement of the executor.
7. Communication: Keep the Estate Recovery Program informed of any delays in settlement. The claim does not accrue interest over time.
8. Final Accounting and Payment: If the claim isn’t fully paid, an accounting must justify why. The accounting can be informal. Executors should consult lawyers to agree on payment details with the program.
9. Closing the File: After payment, the program acknowledges receipt and closes the file, instructing the executor to renew contact if additional assets emerge.

Read The Full Guide: Estate Recovery: Will the Medicaid Estate Recovery Program Take My House?

For professional assistance managing estate recovery and protecting your interests, contact Gerhard & Gerhard, P.C. Our expertise ensures compliance with recovery procedures and safeguards your responsibilities as executor.

How to Avoid Medicaid Estate Recovery In Pennsylvania

While it’s possible to legally navigate around estate recovery, consulting an elder law attorney is critical. Here are some examples of cases here medicaid estate recovery could be avoided:

1. Life Insurance Policies: Policies with designated beneficiaries generally avoid recovery.
2. Joint Bank Accounts: Such accounts typically avoid recovery, whereas individual accounts belonging to the deceased are usually subject to recovery.
3. Assets in Trust: Certain trusts can shield assets from recovery; however, placing assets in irrevocable trusts may affect benefit eligibility, and revocable trusts may render exempt assets such as residential real estate non-exempt.
4. Exempt Lifetime Transfers: Certain lifetime transfers are exempt, such as to a disabled child, a trust for a disabled person other than a child, or resident property to a caregiving child if certain criteria are met. If a home is owned only by the Medicaid recipient, adding their spouse to the property is an exempt transfer that can make the property “non-probate” and thereby avoid estate recovery. 
5. Caregiver Exception: Recovery can be avoided if a caregiver lives with the recipient and provides care for two years before nursing home entry or while receiving home- and community-based services through the Aging Waiver (Community HealthChoices) with proper documentation.
6. Home- and Community-Based Services: Recovery applies to such services; voluntary disenrollment may lessen future claims.
7. Undue Hardship: Attorneys can craft compelling cases to argue undue hardship and mitigate recovery, depending on your unique facts and circumstances. 
8. Very Small Estates: Estates valued at $2,400 or less are not pursued for recovery; maintaining low asset levels can prevent claims.
9. Sibling and Disabled Housing: Recovery can be delayed if a sibling or disabled child resides in the decedent’s home.
10. Legal Authority: Asset transfers require legal authority, with agents or guardians acting in the principal’s best interest and obtaining needed approvals.

Read The Full Guide: How to Avoid Medicaid Estate Recovery In Pennsylvania

For tailored advice on avoiding estate recovery, reach out to Gerhard & Gerhard, P.C., where skilled attorneys can guide you through these complex decisions.

How Do I Learn More about the Medicaid Estate Recovery Program

While many are aware of the Pennsylvania Medicaid Estate Recovery Program, the actual payback can be unexpected post-approval of benefits. Here’s where you can find more information:

• Law Treatise by Attorney Gerhard: Chapter 6 of “Pennsylvania Medicaid, Long-term Care,” updated annually by Robert C. Gerhard, III, offers an in-depth look at estate recovery, serving as a reference for Pennsylvania lawyers. Attorney Gerhard’s blog also offers updated information.
• County Assistance Office Caseworkers: Caseworkers occasionally discuss the program during the application process, though this is less common since applications are often processed by mail.
• Medicaid Application (Form PA-600L): Briefly mentions the Estate Recovery Program.
• Estate Recovery Phone Number: Consumers and executors can call (800) 692-7462 for basic queries. For legal advice and advocacy, contact Gerhard & Gerhard law offices. Our team can help navigate exceptions or undue hardship scenarios.
• Department of Human Services Website: Offers general estate recovery information and an online brochure, advising consultation with a lawyer for deeds and transfers.
• Estate Recovery Regulations: Found in 55 Pa. Code §258. Seeking counsel from an elder law attorney ensures all program nuances are understood.

Read The Full Guide: How Do I Learn More about Pennsylvania’s Medicaid Estate Recovery Payback?

Get Expert Legal Services From Gerhard & Gerhard, P.C.

Navigating the complexities of Medicaid estate recovery can be challenging, but you don’t have to do it alone. Gerhard & Gerhard, P.C. is here to provide expert legal advice tailored to your unique circumstances. Our experienced attorneys can help ensure that your interests are protected and you fully understand your options. Contact us today for a consultation and take the first step toward peace of mind in managing estate recovery matters.