What Assets Are Exempt From Medicaid Estate Recovery Rights?

When a Medicaid beneficiary passes away, their estate may be obligated to pay back outstanding debts, potentially including Medicaid long-term care benefits. However, some assets are exempt from Medicaid estate recovery.

The Medicaid Estate Recovery Program seeks reimbursement from the value of a home or automobile, as well as savings, retirement accounts that fail to designate a beneficiary, and other probate assets in the name of the deceased beneficiary. The majority of the funds recouped by Pennsylvania’s estate recovery program are derived from the sale of the deceased beneficiary’s residence. However, not all assets are subject to estate recovery payback.

Medicaid Estate Recovery Exemptions

Assets that are generally exempt from Medicaid estate recovery include:

  • Property jointly owned by the decedent (the deceased) and another person
  • Life insurance proceeds paid directly to a designated named beneficiary
  • Assets placed in a trust prior to the death of the decedent
  • Irrevocable funeral reserves used for the funeral costs
  • Certain trusts for disabled individuals
  • Certain property of Native American Indians
  • Government reparations to special populations
  • Very small estates, if under $2,400
  • Other assets if estate recovery would cause undue hardship

What Other Limitations Exist?

If a deceased Medicaid recipient in Pennsylvania has no probate assets, there is generally no estate recovery. Unless there are exceptional circumstances, such as fraud or failure to disclose assets, the Medicaid Estate Recovery Program cannot normally go after your family members to pay back Medicaid benefits that were properly paid. 

However, they can pursue probate assets that were improperly distributed to family members from a probate estate without addressing the Department’s claim. If estate assets are distributed without addressing the estate recovery claim, the PA Department of Human Services can pursue both the personal representative of the estate (executor) and those who received the estate distributions. Both the executor and the recipients of the property subject to the estate recovery claim can be held personally liable.

One common misconception is the belief that Medicaid can only reclaim funds from medical assistance services rendered in the last five years of the decedent’s life. In fact, there is no time limit on Medicaid’s estate recovery program. Generally, the executor of the estate is required to notify the Department of a Medicaid recipient’s passing and request a claim for anyone who received medical assistance between the age of 55 and the time of their death. 

There are many ways to legally avoid Medicaid estate recovery in Pennsylvania. Before requesting a claim from the Department, always consult with an experienced elder law attorney.

Assistance With Medicaid Estate Recovery

If you have additional questions about exemptions from Medicaid estate recovery, contact Gerhard & Gerhard, PC.

Disclaimer: We recommend that you have ongoing legal advice from an elder law attorney before attempting to navigate the Medicaid application process. If you have questions or wish to secure our services, please contact Gerhard & Gerhard, P.C.

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