Golfers know the heartbreak of building an impressive score on the first nine holes, only to see it slip away into disaster the “Back 9.”

Something similar can happen in Medicaid planning. People sometimes do well protecting assets during their lifetimes, only to lose them after death.

With Medicaid, one of the major lurking water hazards is Pennsylvania’s estate recovery program.

You may know that for Medicaid purposes, some assets are non-countable or exempt, meaning you don’t need to sell them or spend them down to qualify for benefits. There’s a catch, though – they’re only exempt while you’re alive.

You may have a house, car, furniture, bank account, and insurance policy that were untouchable during your lifetime, but they’re all up for grabs after you’re gone if you have received Medicaid benefits after age 55.

Pennsylvania’s Medicaid program keeps track of every dollar paid for your care, and the Commonwealth’s estate recovery program makes a claim on your estate in that amount. Your estate cannot pass to anyone else until the estate recovery claim is paid.

That’s why it’s important to take steps with titling and beneficiary designations to make sure you don’t inadvertently give away your assets to the state.

Take your life insurance policy, for example. Let’s say you have a policy through your retirement program that pays a death benefit of $50,000. If it’s a group term policy, like most retirement policies, it won’t count when you apply for Medicaid benefits. But if you made your estate the beneficiary, or the proceeds go to your estate because the beneficiary you named has died, your $50,000 payoff will go first to the estate recovery program. Your relatives will get what (if anything) is left over.

If you were careful to name a living beneficiary, and preferably some alternates in case your first choice dies, your proceeds could pass to a loved one, with no obligation to pay any estate recovery claim.

Our attorneys can help you craft a good plan to keep you from losing assets on the “Back 9” of your life.

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