“Estate recovery” is Pennsylvania’s program for recovering Medicaid costs from the estates of recipients who have died.

For example, if Aunt Martha spent a year in a nursing home receiving Medicaid and then died owning a house worth $200,000, the estate recovery program would try to recover the Medicaid dollars spent for her care from Aunt Martha’s probate estate. Whether the state succeeds or not depends on a number of things.

First, the state can only receive payment for services rendered during the five years preceding death “to an individual 55 years of age or older.” If Martha received Medicaid benefits longer ago than five years, or when she was under age 55, estate recovery would not apply.

Second, the state can recover from a Medicaid recipient’s probate estate. If she owned her house jointly with another person “with rights of survivorship,” then the house would not be subject to estate recovery because it would not be part of her probate estate.

Third, there may be an “undue hardship” exception. An example of an undue hardship exception applies to the primary residence in the case in which a caregiver lived in the residence for at least two years before the Medicaid recipient received benefits, provided care or support during those two years, and has no other alternative permanent residence.

Finally, the state will postpone collection of its estate recovery claim until:

  • the death of any surviving spouse;
  • the death of any child who is blind or totally and permanently disabled;
  • the date any surviving child turns 21 years of age; or
  • the date when a sibling of the recipient (who also has an equity interest in the property and has been living in the property for at least one year prior to the death of the recipient) dies, vacates the property, or transfers the property.

As you can see, Pennsylvania may be able to recoup Medicaid costs from Aunt Martha’s estate. But depending on the circumstances, the state may get nothing or may have to wait to collect its money.

For more details on how and when estate recovery applies, you can read Pennsylvania’s regulations at 55 Pa. Code 258.1 -258.14.

For advice on how to avoid losing assets to estate recovery, read this prior blog post: “Medicaid estate recovery: don’t lose assets on the ‘Back 9.’”

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