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 to include Medicaid long-term care benefits. However, some assets are exempt from Medicaid estate recovery.

The Medicaid Estate Recovery Program looks to be repaid from the value of a home, savings, automobile, 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 the estate recovery payback.

Medicaid Look-Back 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 work undue hardship

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.

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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