By Robert C. Gerhard, III, Certified Elder Law Attorney
Only Medicaid benefits received by individuals after age 55 is recoverable, and only where the Medicaid benefits were for specific types of services, notably for long-term care. Estate recovery does not apply to Medicaid payments made before the recipient reached age 55.
Specifically, Pennsylvania’s Estate Recovery Program only seeks reimbursement for certain services:
- Nursing facility services
- Home- and community-based services such as those provided through the Community Health Choices Waiver Program, sometimes known as the Aging Waiver Program.
- Related hospital and prescription drug services.
Understanding Probate Property
Only “probate property” is subject to estate recovery. Under present Pennsylvania law, property liable to repay the Department’s claim includes only property is in the deceased Medicaid recipient’s probate estate.
This includes all real and personal property of a decedent which is subject to administration by a decedent’s personal representative, whether actually administered or not administered.
See below to learn more about the definition of probate property for purposes of Medicaid estate recovery.
Life Insurance
Life insurance payable to the decedent’s estate is subject to the Department’s estate recovery claim, even if the life insurance policy contains a facility of payment clause—a contract provision that enables an insurance company to pay policy proceeds directly to certain family members, not to the estate, even where there is no designated beneficiary. Life insurance payable directly to a designated beneficiary is not probate property, and is not subject to estate recovery.
Deposit and Patient Care Accounts
Bank accounts in the decedent’s name alone with no beneficiary designation are generally considered “probate property” and subject to the Medicaid payback. Bank accounts and patient care accounts paid directly to specified family members outside of probate pursuant to 20 P.S. §3101(b) and 20 P.S. §3101(c) are also included in the definition of estate assets for purposes of Pennsylvania’s Medicaid Estate Recovery Program. A patient care account is also called a “resident fund account” and is normally a small account held at the nursing home for the resident to pay for personal needs.
This includes excess funeral reserves which would otherwise be subject to formal estate administration but for the operation of 20 P.S. §3101, and which are instead paid directly to family members by the funeral director.
Examples of Non-Probate Assets
Non-probate assets are generally exempt from estate recovery and include:
- jointly owned property, such as a joint bank account or real estate owned jointly with right of survivorship
- life insurance proceeds paid to named beneficiaries
- assets in trust payable to the trust beneficiaries
- irrevocable funeral reserves to the extent used for funeral and burial expenses
- certain trusts for disabled persons
Click here to contact Gerhard & Gerhard, P.C. for help with your estate administration and estate recovery issues. The direct path to secure answers to your estate recovery questions is to contact our law office for a consultation. The legal fee for the consultation is a permissible estate administration expense, paid ahead of the estate recovery claim under Pennsylvania’s priority statue. For additional details, read our full blog article on the Pennsylvania Medicaid Estate Recovery Program.
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Disclaimer: We recommend that you receive ongoing legal advice from an estate attorney before attempting to administer a trust or an estate. If you wish to secure our services to provide guidance and representation in connection with a trust or estate administration, please contact us.
