Paying for medical care can be a daunting task. Where will this money come from, and how are you supposed to be able to pay it? If you or a loved one are seeking to enter into a long-term care facility, you may qualify for Medicaid to reduce some of your expenses related to medical care. However, it is important to note that the state of Indiana may try to recover the costs of your medical care under the Indiana Medicaid Estate Recovery Program.

Indiana Medicaid Estate Recovery Program

The Indiana Medicaid Estate Recovery Program is how the state seeks to recover amounts paid by Medicaid on behalf of a qualified individual. When a Medicaid recipient dies, Indiana is required by federal and state law to seek recovery from their estate funds equal to the amount used to pay for their medical expenses.

What Is An Estate?

Under the Medicaid Estate Recovery Program, an estate consists of assets and property owned by the Medicaid recipient at the time of their death. The assets and property include all real and personal property in the recipient’s probate estate.

Assets That Can Be Recovered

Under the Medicaid Estate Recovery Program, the following types of assets may be recovered:

  • Real property, including property conveyed to the recipient’s survivor through joint tenancy with the right of survivorship.
  • Any money remaining in the recipient’s bank account regardless of whether the account has a payable on death provision.
  • Any money remaining in the recipient’s nursing home account as of the date of death.
  • Any funds in a Qualified Income Trust as of the date of death.
  • Any funds remaining in the funeral trust after the funeral has been paid in full.
  • Annuities purchased after May 1, 2005.
  • Assets in a revocable trust if the assets were transferred into the trust after May 1, 2002.

Unfortunately, a Medicaid recipient’s house and real estate may be subject to estate recovery, including a house owned by a Medicaid recipient but conveyed to another individual through joint tenancy with the right of survivorship.

Assets That Cannot Be Recovered

Under the Medicaid Estate Recovery Program, the following assets may not be recovered:

  • The proceeds of a life insurance policy that names a beneficiary.
  • Real property held by a Medicaid recipient subject to a life estate.
  • Non-probate assets transferred out of the probate estate before May 1, 2002.
  • The sum due from an annuity contract purchased before May 1, 2005.
  • Personal effects, ornaments, or keepsakes of the Medicaid recipient.
  • Assets protected by an Indiana Partnership Long-Term Care Insurance Policy.
  • All assets if the Medicaid recipient is survived by a spouse, a child under 21 years of age, or a child who is disabled or blind.

Further Limitations On The Medicaid Estate Recovery Program

Indiana doesn’t seek recovery of assets if it results in substantial and undue hardship for the surviving beneficiaries. To be eligible for an undue hardship waiver, a beneficiary must be a member of the immediate family of either the deceased recipient or the deceased recipient’s spouse.

Status Of The State’s Claim

When Indiana seeks recovery of assets to pay for Medicaid benefits, the state has preferred status. The state’s claims are supposed to be paid in full before other debts are paid and other distributions are made to the Medicaid recipient’s beneficiaries.

However, some expenses can be paid before the state’s claim is paid. These expenses include funeral and cemetery expenses of up to $2,150 and may consist of certain costs of the Medicaid recipient’s last illness.

Limitations On When The State May Seek Recovery

Indiana has up to nine months after the Medicaid recipient’s death to seek recovery of assets not included in the probate estate. Under certain circumstances, the time limitation may not apply. Those circumstances include the following:

  • Assets not reported to the county office of Indiana Family and Social Services Administration, Division of Family Resources.
    • Assets that were transferred by way of a Transfer on Death deed.
    • Property transferred during the Medicaid recipient’s life while on Medicaid.
    • Property transferred after the Medicaid recipient’s death and not included in the Medicaid recipient’s probate estate.
  • When filing a claim against an open probate estate.

Medicaid Attorney In Indiana

Are you concerned that your assets will be subject to the Medicaid Estate Recovery Program? Contact an experienced Medicaid planning attorney at Hawkins Elder Law to help you navigate these questions. Reach out to us today by calling (812) 268-8777 or online for a free consultation.

About The Authors

Jeff R. Hawkins and Jennifer J. Hawkins co-author this blog with Thomas E. Hynes, a lawyer admitted to practice in Pennsylvania, New Jersey and Florida who has a background in estate planning and elder law. Jeff and Jennifer are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers. They are also active members of the Indiana State Bar Association and the Indiana Chapter of the National Academy of Elder Law Attorneys (NAELA). Jeff is also a member of the Illinois NAELA Chapter.

Both Hawkins are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois.

Jeff is a Fellow of the American College of Trust and Estate Counsel and the Indiana Bar Foundation. He is also a member of the Illinois State Bar Association and he served as the 2014-15 President of the Indiana State Bar Association.

More Information

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