Large white house, decorative trees, and lawn under blue sky with swirling clouds

Suppose Medicaid is paying your nursing home bills. As a Medicaid recipient, you’ve already demonstrated that you have low income and assets. You’ve already confirmed with Medicaid that you own a house. And Medicaid lets you keep your house while you receive benefits.

What you might not know is that Medicaid might attempt to take your house when you die. You might be surprised to learn that Medicaid has the legal right to do this in certain circumstances. The Medicaid planning attorneys at Hawkins Elder Law provide you with a brief rundown of how Medicaid can take your home through estate recovery and how our attorneys could assist you if you have questions relating to Medicaid planning.

What Is Medicaid Estate Recovery?

In Indiana, you could receive nursing home Medicaid benefits when you own a home. But there are strings attached. In the worst-case scenario, Medicaid will attempt to take your home when you die to recoup the benefits you received.

The state of Indiana uses a legal process known as estate recovery. If you received Medicaid benefits in Indiana, then after you die, the state uses estate recovery to take some of your assets to cover the benefits Medicaid provided to you, considering the medical expenses they paid after you turned 55 years old.

Your estate consists of all assets, including personal property and real property, that you own at your death. Assets could include a vacation home, money remaining in your bank account or nursing home account, money held in your trusts, whole life or universal life insurance policies with cash surrender values, and more.

What Assets Cannot Be Recovered By The State?

Some of your assets might not be reachable by the state, including property that you transfer to certain trusts, personal effects, life insurance proceeds that are paid to your beneficiaries, and assets that are provided to your surviving spouse, a child under 21 years old, or a child who is blind or disabled. If you are a married Medicaid recipient and your spouse survives you, the state will not seek recovery until after your spouse’s death. However, Indiana law prohibits estate recovery against the community spouse’s assets after their death.

Undue Hardships

Medicaid generally does not seek an estate recovery if the Medicaid recipient died and is survived by a beneficiary who is their or their spouse’s immediate family member, and it would be a “substantial and undue hardship” to the beneficiary. The beneficiary would have to apply for a hardship waiver within 90 days of the date of claim.

What Is A Preferred Claim?

The state of Indiana can file a claim against the estate of the Medicaid recipient. This is a preferred claim which means that the claim must be fully paid before other estate debts are paid. The claim must be paid before any heirs receive distributions. But the executor can pay certain expenses before satisfying the claim, including those relating to estate administration and the Medicaid recipient’s last illness and funeral. It is important to note that if the Medicaid recipient has a Miller Trust in place, the funds in that Miller Trust cannot pay the estate’s expenses.

How Long Does Indiana Have To Seek An Estate Recovery?

The state of Indiana can file a claim if the Medicaid recipient’s probate estate is open. So, if it is necessary to open an estate, an elder law attorney might delay opening the estate until after the estate recovery deadlines have expired.

Up until nine months after the Medicaid recipient dies, the state of Indiana could potentially pursue a recovery of assets that are not in the recipient’s estate (assets transferred during the Medicaid recipient’s life or after their death so that those assets would not be included in their probate estate). In some cases, the state may have a longer time, and there is no time limit relating to the assets that have not been reported to DFR’s FSSA Division.

What Is Medicaid Asset Protection? How Do I Protect My Assets From Medicaid In Indiana?

Asset protection involves using strategies to protect your assets – including your home – from counting against you for Medicaid purposes. With a skilled elder law attorney’s help, you could protect your home from being considered by Medicaid altogether. An attorney can also help you structure your real estate ownership to avoid any estate recovery.

How Do I Avoid Medicaid’s 5-Year Lookback?

With Medicaid’s five-year lookback period, Medicaid investigates transfers of your assets (including your home) to see if you sold them, gifted them, or transferred them for less than they were worth. If this happens, Medicaid can impose a penalty that essentially requires you to pay out of pocket for long term care for a specified period. For this reason, planning for Medicaid in advance makes a lot of sense.

Medicaid Lawyer In Indiana

To learn more about preventing Medicaid from taking your Indiana home, you should consult with an Indiana Medicaid planning attorney. Click here to learn more about Medicaid planning strategies in Indiana.

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 and active members of the Indiana State Bar Association and the Indiana Chapter of the National Academy of Elder Law Attorneys (NAELA).

Jeff is a Fellow of the American College of Trust and Estate Counsel. He is also licensed in Illinois, a member of the Illinois State Bar Association, and a member of the Illinois NAELA Chapter.

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