The Medicaid Lien
As discussed in prior posts, Medicaid planning by counsel must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of the recipient. The Medicaid lien is discussed in N.J.A.C. 49:14.1. The lien is applicable to an individual’s “estate,” which is basically defined as real or personal property and other assets in which the Medicaid beneficiary had any legal title or interest at the time of death to the extent of that interest, including assets conveyed to a survivor, heir or assign of the beneficiary through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement . . . The regulation goes on to discuss certain types of trusts which are also subject to the lien.
There are many issues that could be discussed with regard to the coverage and the language of the lien statute, which are beyond the scope of this article.
Basically, the initial inquiry should be the factors that give rise to the existence of the lien. Firstly, in order for there to be a lien, a deceased individual must have an asset that did not preclude Medicaid eligibility. Secondly, such asset must come within the lien statute.
Typical examples of such assets have been discussed in prior postings, which would include both a discussion of the lien and, in certain circumstances, how to avoid the applicability of the lien:
1. Of course, the most obvious example of assets in one’s “estate” for lien purposes is joint assets particularly joint tenancies with right of survivorship and tenancies in common. For Medicaid purposes, such assets are treated as “inaccessible resources.” See Post 35 for a more detailed discussion of joint assets.
2. Property Owned By Applicant Residing With Caretaker Child (Post 6).
3. Although not discussed in great detail, the transfer of the home by a married couple to another would temporarily take the property out of the lien statute. Basically, the lien would not apply upon the death of the first spouse since property passing to a spouse is not subject to the lien. Medicaid would apply to the lien to such property upon the death of the second spouse.
4. The lien does not apply to the estate of deceased beneficiary if a family member of the deceased beneficiary had continuously resided in the home of the beneficiary (see Post 14 relating to Dependent Relative).
5. Post 23 discusses the transfer of a home owned jointly by an individual to a Protected Transferee (i.e. caretaker child) as removing the home from the lien as one of the benefits.
6. Post 42, which discusses assets transferred to a disabled child, which is an exempt transfer.
7. The most significant exemption from the lien statute, which previously had been allowed as administrative decision is incorporated in the regulations which state “a life estate in which the beneficiary held an interest during his or her lifetime.”
There are an infinite number of issues relating to the lien and the applicability of the lien which could be discussed. Of particular significance is the applicability of the lien to certain types of testamentary trusts. The above discussion is intended to familiarize the reader with the significance of the lien and some of the salient issues.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© October 2009, Post 55
Showing posts with label Medicaid lien. Show all posts
Showing posts with label Medicaid lien. Show all posts
Tuesday, October 6, 2009
Friday, April 24, 2009
Effect of Inheritance by Medicaid REcipient on Eligibility
Effect of Inheritance by Medicaid Recipient on Eligibility
A. Medicaid Recipient Becomes Beneficiary of an Estate
1. As previously indicated (see Post 27), property in probate is treated as an inaccessible resource. Therefore, merely acquiring the status of beneficiary would not render a Medicaid recipient ineligible.
2. Distribution of the inheritance would render the individual ineligible until the resource requirement was again met.
3. If the distribution is not made to the individual and the individual dies while receiving Medicaid benefits, the prospective inheritance becomes subject to the Medicaid lien as a probate asset.
4. A disclaimer by the potential Medicaid recipient is treated as a transfer and will result in ineligibility.
B. Inheritance by a Recipient of an Inaccessible Resource
1. One type of excludable resource is an inaccessible resource - N.J.A.C. 10:71-4.4(b) (6). Examples set forth in the regulations include “real property that cannot be sold because of the refusal of a co-owner to liquidate.”
2. Therefore, if upon the death of another, a Medicaid recipient becomes a co-tenant in a joint tenancy with right of survivorship or a tenancy in common, the property interest will not result in disqualification if the co-tenant refuses to liquidate. However, upon the death of the Medicaid recipient, the property will be subject to the lien to the extent of his “interest” at date of death.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #28
A. Medicaid Recipient Becomes Beneficiary of an Estate
1. As previously indicated (see Post 27), property in probate is treated as an inaccessible resource. Therefore, merely acquiring the status of beneficiary would not render a Medicaid recipient ineligible.
2. Distribution of the inheritance would render the individual ineligible until the resource requirement was again met.
3. If the distribution is not made to the individual and the individual dies while receiving Medicaid benefits, the prospective inheritance becomes subject to the Medicaid lien as a probate asset.
4. A disclaimer by the potential Medicaid recipient is treated as a transfer and will result in ineligibility.
B. Inheritance by a Recipient of an Inaccessible Resource
1. One type of excludable resource is an inaccessible resource - N.J.A.C. 10:71-4.4(b) (6). Examples set forth in the regulations include “real property that cannot be sold because of the refusal of a co-owner to liquidate.”
2. Therefore, if upon the death of another, a Medicaid recipient becomes a co-tenant in a joint tenancy with right of survivorship or a tenancy in common, the property interest will not result in disqualification if the co-tenant refuses to liquidate. However, upon the death of the Medicaid recipient, the property will be subject to the lien to the extent of his “interest” at date of death.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #28
Thursday, April 9, 2009
Additional Benefits for a Single Individual Owning Home Jointly with a Protected Transferee
Additional Benefits for a Single Individual Owning Home
Jointly with a Protected Transferee
Medicaid planning must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of a recipient of benefits. The discussion in Post 6 relating to a child who “resided” in the home for at least two years prior to institutionalization and provided care which permitted the individual to reside at home rather than go in a nursing home addresses mainly the issue of Medicaid eligibility. The prior post involved related to the transfer of the home to a “protected transferee” and that addressed mainly the issue of Medicaid eligibility. However, the planning issues involved when there is joint ownership by the parent and the child relate to the disqualification of Medicaid after eligibility and avoiding the Medicaid lien. For purposes of this discussion, joint ownership shall refer to a joint tenancy with right of survivorship (i.e., property passes to the survivor upon the death of the first of parent or child).
A. Assuming the requirements of eligibility are met, joint ownership of applicant’s residence with a child who is a protected transferee (or even a child who is not a protected transferee) will not preclude eligibility. N.J.A.C. 10:71-4.4(b)6. treats real property which cannot be sold because of the refusal of a co-owner to liquidate as an inaccessible resource.
B. However, disqualification from eligibility and the Medicaid lien are avoided by a transfer of applicant’s joint interest to a “protected transferee” child.
1. The Medicaid lien is avoided by terminating ownership, and, thereby removing the property from a Medicaid recipient’s “estate.” That is, assets that are part of one’s estate after the individual dies and receives Medicaid are subject to the Medicaid lien. It is noted that the lien statute expressly applies to joint tenancies.
2. Assuming the child disinherits the transferor parent, the problem of inadvertent disqualification is eliminated (joint ownership, child dies first and property passes to parent by operation of law).
3. If both individuals are alive and joint ownership were not terminated and the parent had qualified for Medicaid, a sale of the property would result in one-half the net proceeds being allocated to the parent with subsequent loss of eligibility.
Note: Another category of protected transferee is a (i) sibling who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstances of joint ownership with a child.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #23
Jointly with a Protected Transferee
Medicaid planning must consider three interrelated goals: to establish Medicaid eligibility, to avoid disqualification after eligibility and to avoid the Medicaid lien after the death of a recipient of benefits. The discussion in Post 6 relating to a child who “resided” in the home for at least two years prior to institutionalization and provided care which permitted the individual to reside at home rather than go in a nursing home addresses mainly the issue of Medicaid eligibility. The prior post involved related to the transfer of the home to a “protected transferee” and that addressed mainly the issue of Medicaid eligibility. However, the planning issues involved when there is joint ownership by the parent and the child relate to the disqualification of Medicaid after eligibility and avoiding the Medicaid lien. For purposes of this discussion, joint ownership shall refer to a joint tenancy with right of survivorship (i.e., property passes to the survivor upon the death of the first of parent or child).
A. Assuming the requirements of eligibility are met, joint ownership of applicant’s residence with a child who is a protected transferee (or even a child who is not a protected transferee) will not preclude eligibility. N.J.A.C. 10:71-4.4(b)6. treats real property which cannot be sold because of the refusal of a co-owner to liquidate as an inaccessible resource.
B. However, disqualification from eligibility and the Medicaid lien are avoided by a transfer of applicant’s joint interest to a “protected transferee” child.
1. The Medicaid lien is avoided by terminating ownership, and, thereby removing the property from a Medicaid recipient’s “estate.” That is, assets that are part of one’s estate after the individual dies and receives Medicaid are subject to the Medicaid lien. It is noted that the lien statute expressly applies to joint tenancies.
2. Assuming the child disinherits the transferor parent, the problem of inadvertent disqualification is eliminated (joint ownership, child dies first and property passes to parent by operation of law).
3. If both individuals are alive and joint ownership were not terminated and the parent had qualified for Medicaid, a sale of the property would result in one-half the net proceeds being allocated to the parent with subsequent loss of eligibility.
Note: Another category of protected transferee is a (i) sibling who has an equity interest in the home; and (ii) who was residing in the home for at least one year prior to the date of institutionalization. The situation usually arises when sibling is joint owner of a two-family dwelling. The need to avoid the Medicaid lien is not as compelling in this situation as in the circumstances of joint ownership with a child.
Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.
© April 2009, Post #23
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