MA Estate Recovery

Medical Assistance (MA) Estate Recovery

Medical Assistance (MA) estate recovery is a program that the federal government requires the State of Minnesota to administer to receive MA funds. County agencies, on behalf of the state, assert MA claims against the estates of deceased MA enrollees, or the estates of the enrollees’ spouses, to recover the amount MA paid for certain services described in state and federal law.

Estate recovery is not optional for Minnesota. Under federal Medicaid law, a participating state “shall seek adjustment or recovery of any medical assistance correctly paid” from the estates of certain recipients, including those who were 55 years of age or older when they received it. 42 U.S.C. § 1396p(b)(1). Running an estate recovery program is a condition of receiving federal MA funds, so if you or a family member received MA, the program can reach the estate later.

Minnesota carries out that federal mandate through its own statute, under which the amount paid for MA “shall be filed as a claim against the estate of the person or the estate of the surviving spouse.” Minn. Stat. § 256B.15, subd. 1a. The county agency, not the state directly, files the claim: it “shall file a claim in the estate under this section on behalf of the claimant who shall be the commissioner of human services.” Minn. Stat. § 256B.15, subd. 1i. Counties do the filing in part because they keep a share of what comes back. Counties “are entitled to one-half of the nonfederal share of medical assistance collections from estates that are directly attributable to county effort.” Minn. Stat. § 256B.15, subd. 1a(f). The county-on-behalf-of-the-state mechanism reflects a genuine financial stake, not mere administrative delegation.

MA estate recovery procedures are found in the MA estate recovery manual.

Recoverable Services

Only certain benefits are recoverable, and the reach depends on the recipient’s age and living situation. The following program services are subject to estate recovery:

• MA

  • The following MA services received by enrollees 55 years old or older who did not permanently reside in a medical institution:

    • Nursing facility services (NFS)
    • Home and community-based services (HCBS)
    • Hospital and prescription drug services received during the time the enrollee was provided NFS or HCBS

    For this group, recovery is limited to those categories. 42 U.S.C. § 1396p(b)(1)(B)(i); Minn. Stat. § 256B.15, subd. 2(a)(1).

  • All MA services received by enrollees, regardless of age, who permanently resided in a medical institution (an inpatient who cannot reasonably be expected to be discharged and return home). Here recovery is not limited to particular service categories: the claim reaches the total amount of MA rendered during the institutionalization. 42 U.S.C. § 1396p(b)(1)(A); Minn. Stat. § 256B.15, subd. 2(a)(2).

• General Assistance Medical Care (GAMC). GAMC is recoverable regardless of the recipient’s age and in full, not just the age-55 long-term-care subset that limits ordinary MA recovery. Minn. Stat. § 256B.15, subds. 1(b), 2(a)(3). GAMC ended in 2011, so no new GAMC is being incurred, but the estate of anyone who received GAMC while the program was active remains subject to recovery.
• Alternative Care (AC) services received on or after July 1, 2003. A claim for AC is net of any premiums the recipient paid on or after July 1, 2003, and reaches only services provided on or after that date. Minn. Stat. § 256B.15, subd. 2(b).

Two points on how much can be recovered are worth knowing:

• A state can expand what is recoverable. For a recipient who was 55 or older, federal law lets a state, at its option, reach beyond NFS, HCBS, and related hospital and prescription drug services to any item or service covered under the state plan (but not Medicare cost-sharing or Qualified Medicare Beneficiary benefits). What is recoverable therefore depends in part on each state’s election. 42 U.S.C. § 1396p(b)(1)(B)(ii).
• No interest. A Minnesota MA estate recovery claim may include only the enumerated categories of assistance and “shall not include interest.” Minn. Stat. § 256B.15, subd. 2(a).

Generally, all three of these programs (MA, GAMC, and AC) fall under the statutory definition of “medical assistance” for estate recovery purposes. Minn. Stat. § 256B.15, subd. 1(b).

Recoverable Assets

Federal law is the source of Minnesota’s broad reach. It authorizes a state to define the recoverable “estate” to include not only probate property but any real or personal property in which the recipient “had any legal title or interest at the time of death,” including assets conveyed to a survivor, heir, or assign “through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.” 42 U.S.C. § 1396p(b)(4). Minnesota exercises that option, so several assets that pass outside probate are still exposed.

County agencies may recover against the following assets from the estate of an MA enrollee or from the estate of an MA enrollee’s surviving spouse:

• the person’s probate estate. Minn. Stat. § 256B.15, subd. 1a(b)(1);
• all of the person’s interests or proceeds of those interests in real property the person owned as a life tenant, or as a joint tenant with a right of survivorship, that were established on or after August 1, 2003, and were owned at the time of the person’s death. Minnesota’s recovery against these interests reaches only interests established on or after that date; a life estate or joint tenancy created before August 1, 2003, does not continue after the recipient’s death for recovery purposes. Minn. Stat. § 256B.15, subds. 1a(b)(2), 1(d);
  • Recovery on a life estate is limited to the value of the person’s interest on the date of death, using the life estate percentage factor for a person who was the recipient’s age from the DHS Life Estates Mortality Table. Minn. Stat. § 256B.15, subd. 1h(b). That table now appears as Appendix G of the Minnesota Health Care Programs Eligibility Policy Manual; it moved there from the retired Health Care Programs Manual, but the valuation method and the table itself are unchanged.
• all of the person’s interests or proceeds of those interests in securities the person owned in beneficiary form at the time of the person’s death, to the extent the interests or proceeds of those interests become part of the probate estate. Minn. Stat. § 256B.15, subd. 1a(b)(3);
• all of the person’s interests in joint accounts, multiple-party accounts, and pay-on-death accounts, brokerage accounts, investment accounts, or the proceeds of those accounts at the time of the person’s death, to the extent the interests become part of the probate estate. Minn. Stat. § 256B.15, subd. 1a(b)(4); and
• assets conveyed to a survivor, heir, or assign of the person through survivorship, living trust, transfer-on-death of title or deed, or other arrangements. Minn. Stat. § 256B.15, subd. 1a(b)(5).

If you are planning around a marriage, know the limit on reaching into a surviving spouse’s estate. When recovery is pursued in a nonrecipient surviving spouse’s estate, it is limited to the value of assets that were marital or jointly owned property at any time during the marriage; it does not reach the surviving spouse’s separate or later-acquired assets or property inherited from other predeceased spouses. Minn. Stat. § 256B.15, subd. 2(b). Property owned during the marriage is presumed marital “unless there is clear and convincing evidence to the contrary,” so simply titling assets to a spouse does not defeat recovery. Minn. Stat. § 256B.15, subd. 2b.

Exceptions to Estate Recovery

Recovery on an estate claim is delayed when one or more of the following people survive an MA enrollee. Under federal law, recovery “may be made only after the death of the individual’s surviving spouse” and only when there is no surviving child who is under age 21, or who is blind or permanently and totally disabled. 42 U.S.C. § 1396p(b)(2). These deferrals are mandatory on the state, not merely permissive:

• A spouse (recovery waits until after the surviving spouse’s death)
• A child younger than age 21
• A child of any age who is blind or totally and permanently disabled according to Supplemental Security Income program criteria

If your family member remained in the home, federal law separately bars recovery against that home while it is lawfully and continuously occupied by (i) a sibling who resided in the home for at least one year before the recipient’s admission to a medical institution, or (ii) a son or daughter who resided there for at least two years before admission and whose care allowed the recipient to stay home rather than enter an institution. 42 U.S.C. § 1396p(b)(2)(B).

Even recoverable benefits are subject to a mandatory undue-hardship waiver. The state agency must establish procedures under standards set by the Secretary and “shall waive the application of this subsection . . . if such application would work an undue hardship.” This is the general protection any survivor can invoke, alongside the spousal and child deferrals. 42 U.S.C. § 1396p(b)(3)(A).

Certain income, resources, and property of American Indians and Alaska Natives are exempt from estate recovery. Federal law directs states to exempt the income, resources, and property that were exempt as of April 1, 2003, under manual instructions issued because of the federal responsibility for Indian Tribes and Alaska Native Villages, and permits additional estate-recovery exemptions for Indians. 42 U.S.C. § 1396p(b)(3)(B). More detailed limitations on claims are provided in the MA Estate Recovery Manual.

Legal Citations

Minnesota Statutes, section 256B.15 United States Code, title 42, section 1396p

CREDIT: The content of this post has been copied or adopted from the Minnesota Healthcare Programs Eligibility Policy Manual, originally published by the Minnesota Department of Human Services.

This is also part of a series of posts on Minnesota Healthcare Eligibility Policies.