By Robert C. Gerhard, III, Certified Elder Law Attorney
There are a few instances in which Medicaid estate recovery payback can be legally avoided in Pennsylvania, though we always recommend pursuing such actions with the assistance of an elder law attorney.
These instances include:
- Life Insurance Policies. Life insurance policies designating beneficiaries are generally not subject to Medicaid estate recovery, whereas those designating the deceased Medicaid recipient’s probate estate are subject to recovery payback. Some people use the life insurance to pay funeral expenses, but if other probate assets exist, then the designated beneficiary of the life insurance may be able to keep the proceeds without paying the insurance towards the estate recovery claim.
- Joint Bank Accounts. Joint bank accounts are usually not subject to Medicaid estate recovery, but individual accounts of deceased recipients are normally subject to estate recovery.
- Assets In Trust. Certain assets held in trust can avoid estate recovery, though transferring assets to irrevocable trusts can create ineligibility for benefits and revocable trusts can convert exempt assets to non-exempt.
- Work With An Elder Law Attorney to Make Exempt Transfers During Lifetime. Working with an elder law attorney can help ensure certain asset transfers during a Medicaid recipient’s lifetime are exempt from Medicaid transfer penalties and avoid estate recovery.
- Caregiver Exception. The caregiver exception allows for the avoidance of estate recovery if a caregiver resides in the Medicaid recipient’s home and provides care for two years prior to nursing home placement, given proper documentation.
- Home- and Community-Based Services. Medicaid-funded home- and community-based services may result in estate recovery claims, and voluntary disenrollment can prevent high recovery claims if the services provided are minimal.
- Undue Hardship. Cases of undue hardship under Pennsylvania’s estate recovery regulations can be addressed by working with a law firm to draft a compelling letter and provide supporting documentation.
- Very Small Estates. The Estate Recovery Program does not seek recovery from probate assets with a gross value of $2,400 or less, so keeping assets below this threshold can avoid recovery.
- Sibling with Equity Interest in Home and Disabled Persons in Home. Estate recovery can be delayed if there is a sibling of the decedent living in the home, or a disabled child living in the home. Each case has unique facts and circumstances, but estate recovery can be delayed if certain facts exist.
- Legal Authority Is Required. Legal authority is required to move assets to avoid estate recovery, and agents under power of attorney or court-appointed guardians must consider the principal’s best interests and seek necessary approvals.
Click here to contact Gerhard & Gerhard, P.C. for help with your estate administration and estate recovery issues. The direct path to secure answers to your estate recovery questions is to contact our law office for a consultation. The legal fee for the consultation is a permissible estate administration expense, paid ahead of the estate recovery claim under Pennsylvania’s priority statue. For additional details, read our full blog article on the Pennsylvania Medicaid Estate Recovery Program.
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Disclaimer: We recommend that you receive ongoing legal advice from an estate attorney before attempting to administer a trust or an estate. If you wish to secure our services to provide guidance and representation in connection with a trust or estate administration, please contact us.
