Alaska Medicaid Estate Recovery Basics Timothy M. Twomey, AAG (907) 269-5168 Tim.Twomey@Alaska.Gov

What is Medicaid? Medicaid is a joint federal/state program that pays for medical care for individuals who cannot pay their own medical bills. To qualify for Medicaid, an individual must have limited income and resources. Medicaid eligibility rules are complicated, and different states apply different rules. Each state operates its own Medicaid program, consistent with federal law.

What is estate recovery? OBRA '93 requires each state to recover the costs of nursing facility and other long-term care services from the estates of Medicaid beneficiaries. At a minimum, states are required to file claims in probate court against the estates of certain deceased Medicaid beneficiaries.

What exactly is an estate? An estate is usually defined as all real estate and personal property that passes from a deceased person to an heir through a will or by rules of intestate succession. Property that passes directly to joint owners or to beneficiaries under a trust is traditionally not considered part of the probate estate. However, OBRA '93 gives states the option to expand the definition of estate to include these types of interests and any other property that the individual has any title or interest in at the time of death.

Expanded “Estate” Definition If a State chooses to define “estate” in a broader context, recovery from some or all property that bypasses probate may be possible. Such property includes assets that pass directly to a survivor, heir or assignee through joint tenancy, rights of survivorship, life estates, living trusts, annuity remainder payments, or life insurance payouts.

Alaska’s Definition of Estate Includes all real and personal property of the decedent, trust, or other person whose affairs are subject to the Alaska Uniform Probate Code (AS 13.06-13.13) as originally constituted and as it exists from time to time during its administration.

Do states recover from the estates of everyone who receives Medicaid? No, but states must recover money spent on behalf of the following individuals: 1. Individuals who were age 55 or older when they received Medicaid. A state must recover payments made for nursing facility services, home- and community-based services provided under a Medicaid waiver, and related hospital and prescription drug services; and 2. Individuals in nursing facilities, intermediate care facilities for the mentally retarded, or other medical institutions who pay a share of cost as a condition of receiving Medicaid and who cannot reasonably be expected to be discharged and return home. This provision requires that the state determine, after notice and an opportunity for a hearing, that the individual cannot reasonably be expected to return home.

Can states go beyond these requirements? Yes, states have the option to recover payments for all other Medicaid services provided under their state Medicaid plan for individuals age 55 and older. These may include services such as home- and community-based care for functionally disabled persons, community-supported living arrangements, optional personal care, and mandatory home health care.

Who is Subject to Estate Recovery? Recoveries may only be made from the estates of deceased recipients who were 55 or older when they received Medicaid benefits or who, regardless of age, were permanently institutionalized. However, states may exempt recipients if their only Medicaid benefit is payment of Medicare cost sharing (i.e., Medicare Part B premiums). If a state has elected to impose TEFRA liens on recipients’ homes, then it must also recover from the estates of those recipients. States may impose liens on property of Medicaid recipients of any age if they are permanent residents of a nursing home or other medical institution, and if they are expected to pay a share of the cost of institutional care.

cannot reasonably be expected to be discharged and return home This provision requires that the state determine, after notice and an opportunity for a hearing, that the individual cannot reasonably be expected to return home.

What is permanent ? In accordance with 42 CFR 433.36, the state presumes that a client residing in a medical institution for at least 120 consecutive days is not reasonably expected to return home. Transfers from one medical institution to another do not interrupt the 120 day period but discharge from a medical institution to a community setting will terminate the 120 day period. Re-admission to a medical institution starts a new 120 day period.

Are there any exceptions to estate recovery? Recovery cannot be made: before the death of a surviving spouse; if the individual has a surviving child who is under age 21 or who is blind or permanently disabled; and against one's home on which the state placed a lien, unless additional protections for siblings and adult children are satisfied.

How does estate recovery work? When the State determines that a client cannot be expected to return home, or learns of the death of a client, the case is reviewed to determine the value of the estate, whether there are heirs, and if it will be cost-effective to proceed with recovery. Once the decision is reached to place a lien on the estate, the department provides written notice to known representatives, heirs, or beneficiaries of the State’s intent to proceed with collection on the estate.

Written Notice - Content The clients name, social security number, if known, date of birth and date of death, if deceased; How the term “lien” is defined; That the individual will not lose ownership of their home if a lien is imposed; The amount of recoverable Medical Assistance correctly paid on behalf of the client; The department’s intent to file a lien against the client’s real property to recover the applicable Medical Assistance paid on behalf of the client.

Notice of Procedures Notices also provide information on how to request a hardship waiver and how to appeal the department’s decision to proceed with recovery. Appeals may contest the amount of recoverable medical assistance identified by the department or whether the deceased client had legal title to the real property at the time of the client’s death. Appeals must be written, signed, and sent to the Third Party Liability section of the Division of Health Care Services within 30 days of the date of receipt of the notice. Appeals must also include the reason for contesting the Department’s decision and contact information for the representative.

What about the surviving spouse? During a spouse's lifetime, the state Medicaid agency cannot require repayment of Medicaid expenses. However, after the spouse dies, the state may file a claim against the spouse's estate to recover money spent for nursing home care, to the extent of the deceased beneficiary's interest.

What is a lien? A lien is a claim against a specific piece of real estate. When the property is sold or title is transferred, the lien must be paid. For nursing home residents, the lien is the amount of Medicaid payments made on behalf of the persons receiving care. This amount builds up the longer a person receives care.

Lien Exceptions A state Medicaid agency may not place a lien on a home for benefits paid if any of the following relatives live in the home: a spouse; a minor child; a permanently disabled or blind adult child; or a brother or sister who has been residing in the home for at least one year immediately before the Medicaid beneficiary entered the nursing home.

Restrictions on Lien Enforcement There is a living spouse (no matter where he or she lives); There is a child who is under age 21, or is blind or disabled (no matter where he or she lives); There is a brother or sister with an equity interest who lived in the home for the year immediately prior to the nursing home admission (but only if the sibling has continuously lived in the home since that date); There is a non-disabled adult child who had lived in the home at least two years immediately prior to a parent's admission to a nursing home, and was providing care that delayed admission (but only if the adult child has lived continuously in the home since that date).

Offspring Care Exemption An exemption to estate recovery is made in cases where a son or daughter can establish that they provided care to the individual that enabled them to stay at home rather than in an institution. The adult child must provide documentation that they resided with the parent for at least 24-months immediately preceding the beneficiary’s admission into an institution and that they have resided there continuously since the institutionalization began. Documentation must establish that the adult child used the beneficiary’s address as their mailing address, on their driver’s license or voter registration, and that their address remained unchanged throughout this entire time period. Additionally, a parent’s or treating physician’s written statement that the adult child’s presence in the home enabled the parent to live in the community is accepted as proof of providing required care.

Waiver of Estate Recovery States are required to establish procedures for waiver of recovery in cases where undue hardship would result. Congress was particularly concerned about situations where the property subject to recovery is the sole income-producing asset of the survivors, such as a family farm or family business, or a homestead of "modest value," or where other compelling circumstances exist.

Undue Hardship Waiver: Applicants for undue hardship waivers must have a beneficial interest in the estate and must apply within thirty (30) days of receiving notice of the Department’s claim. An application filed up to thirty (30) days late may be treated as timely if the applicant demonstrates good cause for filing late. The filing of a claim by the Department in a probate proceeding shall constitute notice to all heirs.

Undue Hardship Conditions • The estate’s only asset produces income and recovery would cause the survivors’ loss of livelihood; • A survivor’s primary residence is the estate’s only significant asset and state recovery of it would cause impoverishment of the survivor as defined below: State recovery of estate’s proceeds would make the survivor eligible for public assistance; A survivor could discontinue eligibility for public assistance if they were to receive the estate; Recovery would deprive the survivor of food, clothing, shelter or other necessities of life, or medical care, thereby endangering the survivor’s health and safety. • The estate subject to recovery is a home of modest value defined as 50% or less of the average price of homes within the region or major community, based on Alaska Department of Labor statistics and periodically compared to census data adjusted for inflation. Home value is determined as of the date of the recipient's death.

Other Waiver Conditions • Low income Medicare beneficiaries who receive assistance from the Alaska Medical Assistance Program only in the form of payment for their Medicare co-payments and/or deductibles are exempt from estate recovery. • Medicaid expenditures made for services that the recipient would not have been required to pay for if the recipient were not eligible for Medicaid are exempt from recovery. • Certain American Indian and Alaska Native income, resources, and property (including rents, leases, royalties, usage rights, or income from them ) are exempt from recovery if they are : located on or near, or within the most recent boundaries of a current or prior federally recognized or designated reservation, derived from tribal lands, related to natural resources (including their extraction or harvesting) derived from protected tribal lands, if the protected source can be clearly traced; held in trust status or judgment funds that are exempt from recovery by other laws and regulations, originally protected assets and ownership interests that have been inherited, if the protected source can be clearly traced; ownership interests in or usages rights to items not covered above, with unique religious spiritual, traditional, and/or cultural significance or rights that support subsistence or a traditional life style according to applicable tribal law or custom.

Cost Effectiveness The department will pursue a claim only if it determines that the potential recovery amount would result in twice the administrative and legal cost of pursuing the claim, with a minimum pursuable net amount of $10,000. In assessing the value of an estate, the department will consider all other claims against the estate having precedence under state statute. Administrative and legal costs include, but are not limited to, the costs of: a. advertising, filing, and exercising the lien, b. legal representation of the state in court, c. tracking property with potential for a lien and then tracking its subsequent recovery, d. any and all costs associated with repair of the property to bring it into saleable condition, e. insurance costs to protect the asset, f. all costs associated with advertising, listing and selling the home including any and all applicable closing fees.

47.07.055. Recovery of medical assistance from estates (a) The estate of an individual who received medical assistance payments is subject to a claim for recovery of the medical assistance after the individual's death that, except as provided in (b) of this section, may be secured by a lien filed against the individual's real property during the individual's lifetime if the (1) individual was an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution; (2) department required the individual, as a condition of receiving medical assistance under this chapter, to spend for medical expenses all but a minimal amount of that individual's income; and (3) department determined during the individual's lifetime, after notice and opportunity for hearing, that the individual could not reasonably be expected to be discharged from the institution and to return home.

47.07.055 continued (b) A lien may not be filed under (a) of this section against an individual's home if the home is lawfully occupied by the individual's (1) spouse; (2) child under age 21; (3) blind or disabled child as described in AS 47.25.615 (3) or (5) or 42 U.S.C. 1382(c); or (4) sibling, if the sibling has an equity interest in the home and was residing in the home for at least one year before the date of the individual's admission to the institution.

47.07.055 continued (c) The state may not recover the costs of medical assistance under a lien on a home under (a) of this section until after the death of the individual's surviving spouse, if any, and only at a time when neither of the following is lawfully residing in the home: (1) a sibling of the individual who was residing in the individual's home for a period of at least one year immediately preceding the date of the individual's institutionalization and who has continuously resided in the home since the institutionalization began; or (2) a son or daughter of the individual who (A) resided in the home for at least two years immediately preceding the date of the individual's institutionalization; (B) has continuously resided in the home since the institutionalization began; and (C) establishes to the department's satisfaction that the son or daughter provided care to the individual that allowed the individual to reside in the home rather than in an institution.

47.07.055 continued (d) A lien and claim authorized under (a) of this section are extinguished if, during the individual's lifetime, the individual is discharged from the institution and returns home. However, a new lien and claim are authorized for subsequent expenses if the circumstances described in (a) of this section occur after the individual returns home. (e) In addition to recovery of medical assistance upon sale of property subject to a lien authorized under (a) - (d) of this section, after an individual's death, the individual's estate is subject to a claim for reimbursement for medical assistance payments made on behalf of the individual under this chapter for the following services to the extent that those services were provided when the individual was 55 years of age or older: (1) services received while an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institutions; and (2) home and community-based services provided through a waiver received from the federal government that allows home and community- based services to be covered under this chapter for persons who are eligible for coverage under this chapter while in an institution but who are able to avoid institutionalization because of the provision of home and community-based services.

47.07.055 continued (f) Other than a recovery upon sale of a home, a claim under this section may be made only after the death of the individual's surviving spouse, if any, and only at a time when the individual has no surviving child under age 21 and no surviving child who is blind or totally and permanently disabled. (g) For purposes of AS 13.16.470 , the claims authorized under this section are debts with preference under the laws of the state.

Contacts http://hss.state.ak.us/dhcs/contacts.htm Tim Twomey, Assistant Attorney General Department of Law (907)269-5168 tim.twomey@alaska.gov Caitlin Shortell, Assistant Attorney General Department of Law (907)269-8494 caitlin.shortell@alaska.gov

Recipient Help Line If you are a recipient or a recipient advocate and have questions about Medicaid coverage, please call toll free 1 (800) 780-9972 statewide Monday through Friday between 8 a.m. and 5 p.m.

CMS Links http://www.cms.hhs.gov/home/medicaid.asp