The Medicaid Lien

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

The Significance of a Dependent Relative Residing in the Home with Applicant

The Significance of a Dependent Relative
Residing in the Home with Applicant

On many occasions a child will be residing in the home with applicant, and such child might not have any disability or problem of any kind. I have spoken to several Medicaid supervisors and they assumed that the home would be an available resource.

See Program Instruction No. 85-8-9 detailed below which indicates that if the home is occupied by a dependent relative, the home is an exempt resource. The letter ruling lists numerous relatives that can qualify as dependent, and “dependency” is defined broadly. Pursuant to N.J.A.C. 10:49-14.1(g) if a “family member” of a deceased Medicaid beneficiary has, prior to the Medicaid beneficiary’s death, continuously resided in the home which was also beneficiary’s primary residence, the Division will not enforce the lien until the property is sold, or the resident family member either dies or vacates the property. The only issue with such a ruling is that the words “family member” is not defined.

Program Instruction No. 85-8-9

The Medicaid Only Manual (at N.J.A.C. 10:94-4.4(b)(i) provides for the exclusion of a home as a resource during temporary absences, including trips and hospitalizations. That policy is hereby expanded and appears below.

A home may be excluded as a principal place of residence during temporary absences so long as the individual intends, and may reasonably be expected to return home. With the exception appearing in the paragraph below, an absence of more than six months shall be assumed to indicate that the home no longer serves as the principal place of residence. That period may be extended only with approval from the Division of Public Welfare.

If the absence is not temporary and the home is occupied by a spouse or dependent relative, the home shall be considered to be the principal place of residence so long as the spouse or dependent relative continues to reside there, regardless of the length of the absence. In determining if the exclusion of a home applies, a dependent relative included only the following individuals: son, daughter, grandson, granddaughter, stepson, stepdaughter, mother, father, stepmother, stepfather, half-sister, half-brother, niece, nephew, grandmother, grandfather, aunt, uncle, sister, brother, stepsister, stepbrother, mother-in-law, father-in-law,
sister-in-law, brother-in-law, daughter-in-law, and son-in-law. The nature of the dependency (e.g., financial, medical, custodial or any other type of dependent relationship) of any such relative must be determined on a case-by-case basis and must be documented in the case record.

However, it would seem, that a dependent member of the immediate family would allow the home to be excludable as a resource for eligibility purposes and would be not be subject to the lien until such time as the property is sold, the family member dies or vacates the property.

I provided this ruling to a Medicaid supervisor and she re-instituted its significance at a recent meeting with the authorities in Trenton.


Disclaimer: This article does not constitute legal advice and each person may have unique facts for which legal consultation may be necessary.


© March 2009, Post #14