While the Medicaid programs vary from state to state, there is a federal mandate requiring each state to seek reimbursement of Medicaid care. Much of the specific mandates come from a 1993 estate recovery mandate, enacted in the Omnibus Budget Reconciliation Act (OBRA 93). That act requires recovery from Medicaid beneficiaries who:
- Were age 55 or older when they received Medicaid benefits;
- Had been determined to be permanently institutionalized, regardless of age; and
- Were not survived by a spouse or certain other dependents deemed to have a deserving claim on the estate.
Certain restrictions exist on the above (discussed infra.) There are two types of Medicaid liens on the home. The first is known as a TEFRA, or pre-death lien. TEFRA stands for Tax Equity and Fiscal Responsibility Act, which was passed in 1982. TEFRA liens are the only type of lien that may be placed on the home prior to the death of a Medicaid recipient. Prerequisites and restrictions on TEFRA Medicaid liens include:
- First, the beneficiary must be “permanently institutionalized” – but the state must provide the opportunity for a hearing on that finding;
- The State must release the lien if the beneficiary is discharged from care and returns home;
- No Medicaid lien may be placed if any of the following relatives live in the home:
- A spouse;
- A child under 21;
- A blind or permanently disabled child of any age; or,
- A sibling with an equity interest in the home who has lawfully resided in the home for at least 1 year prior to the beneficiary’s admission to the medical institution.
A TEFRA lien will never stop the recipient’s use of the home. Its importance comes into play when the beneficiary tries to transfer the house to someone else. The State can require them to use the equity value to repay past Medicaid spending for long-term nursing home care and other services. If a liability lawsuit is involved, lien resolution and negotiation may be able to discharge the lien through settlement proceeds, and not through home equity. This preceding solution obviously depends on the settlement proceeds and amount of Medicaid care. Additionally, if your client is a conservator, guardian, or other personal representative, a percentage of the lawsuit can probably still be given to that person (as always, this is a reference to Ahlborn).
A TEFRA lien does not mean that the home is lost. If the home owner dies with a TEFRA lien still on the property, Medicaid recovery occurs as part of the estate settlement process. Then, property which is conferred as part of the recipient’s estate to someone without a protected interest in it requires that the transferee pay off Medicaid’s claim. This act will clear title to the property. However, an heir who has no means to pay Medicaid’s claim must either obtain a loan or mortgage to keep the home in the family, or sell the property to pay the Medicaid claim.
Non-TEFRA Medicaid liens, essentially, post-death liens, are governed by each state individually. There are some federal requirements – but the process varies nonetheless based on each states individual property and estate laws. Again, where a lawsuit is involved, cooperation with the state and specific wording of the Medicaid lien settlement release should be examined.
In the current economic climate it is important to remember that each state needs to protect its assets. That means that states, much like the federal government, will continue to act aggressively in obtaining reimbursement of medical payments. If you have questions regarding state Medicaid liens, or, require assistance in any healthcare lien resolution, please contact Lien Resolution Services.Ryan J. Weiner Co-Founder Lien Resolution Services www.lienresolutionusa.com https://lienblog.wordpress.com firstname.lastname@example.org