Medicaid Estate Recovery in New York: Can the State Take the House?

Main programs and routes

What Medicaid estate recovery means

Medicaid estate recovery means the state asks to be paid back from the estate after a Medicaid member dies.

An estate is the money, property, and other assets left after death. In New York’s current Social Services Law section 369, “estate” means real and personal property and other assets included in the person’s estate and passing by a valid will or by intestacy. Intestacy means the person died without a valid will, so state law decides who receives the property.

Estate recovery is not the same as a bill sent to the family. OMIG says the Medicaid claim is against the estate. Family members and estate beneficiaries are not personally responsible for paying the Medicaid claim from their own pockets.

Still, the estate may include a house, bank account, refund, vehicle, or other property. If Medicaid files a valid claim, the estate may have to pay before heirs receive what is left.

New York’s Office of the Medicaid Inspector General, called OMIG, oversees casualty and estate recovery. OMIG may use a contract vendor, HMS, a Gainwell Technologies company, for letters, asset research, and calls.

When estate recovery may apply in New York

New York says estate recovery applies only to certain deceased Medicaid recipients. The main triggers are:

• The person was age 55 or older when they received Medicaid-covered services that are subject to recovery.
• The person was permanently institutionalized. This means they were in a nursing facility, intermediate care facility, or other medical institution and were not reasonably expected to return home.

Federal law requires states to seek recovery for certain Medicaid long-term care costs after age 55. This includes nursing facility services, home and community-based services, and related hospital and prescription drug services.

New York’s OMIG estate recovery FAQ says payments subject to recovery may include home and community-based services, nursing facility services, hospital care, physician services, prescription drugs, Medicaid managed care capitation payments, and certain other Medicaid payments.

A capitation payment is a set monthly payment Medicaid pays to a managed care plan for a member. OMIG says these payments may be subject to recovery even if the actual care used in a month cost less than the monthly plan payment.

If your loved one only had regular health coverage and never used long-term care, the answer may depend on the person’s Medicaid eligibility group, dates, and services paid. Ask for the exact claim dates and service types before you assume the claim is correct.

Is the house at risk?

The house may be at risk, but not in every case.

Ask three questions first:

1. Was the Medicaid member’s name still on the deed at death?
2. Was there a Medicaid lien before death or after death?
3. Is there a protected person living in the home?

If the home is part of the estate

If the home passes through the estate by will or by intestacy, New York Medicaid may file a claim in Surrogate’s Court. Surrogate’s Court is the New York court that handles estates.

Medicaid does not get paid before every other cost. OMIG says estate assets are paid under New York creditor rules. Funeral expenses, estate administration costs, taxes, and certain federal liens may come before Medicaid. Medicaid recovers only up to the lien or claim amount, or the available estate assets, whichever is less.

If there is a lien

A lien is a legal claim against property. A lien can make it hard to sell or transfer the house until the claim is handled.

New York may place a lien on real property during life in limited cases. This can happen when a person is an inpatient in a nursing facility or similar medical institution, is not expected to return home, and other rules are met. The lien must be released if the person is discharged and returns home.

OMIG also says that if a deceased Medicaid recipient held an interest in real property at death, a lien may be placed for the Medicaid claim amount. OMIG says no action is taken on that lien until the real property is sold. If a family member wants to keep living in the property instead of selling it, OMIG says no recovery will be made until the title or deed is transferred and the recipient’s name is removed.

If the house was jointly owned or in a trust

Do not guess. Current New York law, old agency guidance, deed language, trusts, life estates, mortgages, and prior liens can all change the answer.

New York’s current statute defines estate as property passing by will or intestacy. But OMIG materials still discuss liens when the deceased person held an interest in real property. Trust rules can also be different. Show the deed, trust, will, and any Medicaid notices to an elder law attorney or legal aid office before you rely on a simple answer from the internet.

Common protections and exemptions

Some protections delay recovery. Some may stop recovery. Some apply only to a home lien or a home recovery. The wording matters, so ask the agency to put the answer in writing when possible.

Hardship waivers

A hardship waiver asks Medicaid to waive recovery because the claim would cause undue hardship. “Undue hardship” means more than a bill being painful or unfair. It must fit the rules.

OMIG says recovery may be waived in whole or in part if recovery would cause undue hardship to the heir, survivor, or beneficiary of the estate.

OMIG gives two examples where undue hardship may exist:

• The asset is the beneficiary’s only income-producing asset, such as a family farm or family business, and the income from the asset is limited.
• The asset is real property of modest value, with a value no higher than 50 percent of the average selling price in the county as of the Medicaid recipient’s date of death, and the home is the beneficiary’s primary residence.

OMIG also says hardship is not based only on the inability to keep a prior lifestyle. It also will not be found if the hardship was caused by Medicaid or estate planning methods that moved assets away.

If you get an Estate Questionnaire, ask for hardship review in that response. Attach proof. Keep a copy of everything you send.

Who to contact

The best first call depends on what is in front of you.