Michigan Implements Estate Recovery Program

Medicaid Planning

Michigan recently began its long anticipated “Estate Recovery” program. The program enables the state to seek recovery of the cost of the medical care expenses paid to a person older than 55 years of age, via the state’s Medicaid assistance programs, from their estate’s assets at their death.

Although “Estate Recovery” was first mandated by the federal government in 1993. Michigan became the last state to enact an estate recovery law, which occurred in 2007. Despite the passage of the law, implementation of an estate recovery program was delayed until July 1, 2011.

At present, the state is only allowed to seek recovery against a person’s assets that pass through probate. Many assets do not pass through such as assets held in a living trust, certain jointly held assets and certain assets that pass by way of beneficiary designation. As such, the current “Estate Recovery” allow for people who plan ahead to avoid the impact of this program. In addition, there are other limitations on what the state can seek recovery against, including a certain value of a person’s homestead.

The existence of an estate recovery program does not alter the fact that for eligibility purposes a homestead, a motor vehicle and personal property remain exempt assets. In fact, estate recovery has nothing to do with eligibility. Estate recovery only comes into play when a person who was eligible for Medicaid assistance and who received long term care Medicaid benefits, dies.

In late July, early August, clients who had family members who received Medicaid benefits and have since died, began receiving notices that estate recovery claims would be made against the estates of these deceased family members.

Since Michigan’s estate recovery law is new, it is not exactly clear how it will be implemented. However, the following is known about this program:

  • Michigan’s estate recovery law began operating July 1, 2011.
  • It will seek recovery for care costs for allowable Medicaid expenses going back to July 1, 2010.
  • Estate recovery claims will be asserted for all expenses paid to a Medicaid beneficiary receiving assistance for nursing home expenses, or benefits provided through the MI Choice Waiver Program, the Home Help program, the Home Health Program, Medicaid covered hospital expenses, Medicaid covered prescription drugs and/or PACE programs.
  • The program is being operated by Health Management Systems, Inc. (”HMS”), a private entity that operates estate recovery programs in several states. HMS is compensated by receiving a percentage (13.9%) of all funds collected through the estate recovery program. HMS is operating from offices in East Lansing where it has a staff attorney and several caseworkers.
  • The Michigan Department of Community Health also provides general information about Michigan’s estate recovery program atwww.michigan.gov/estaterecovery.
  • When a long term care Medicaid beneficiary dies, HMS generates various documents, including: The Notice of Intent to File Claim Against Estate and the Michigan Estate Recovery Questionnaire. These two documents are mailed to an individual, or law firm, identified by HMS as the “primary contact” for the decedent within 30 days of the death of the Medicaid beneficiary.
  • This Notice of Intent to File Claim Against Estate asserts that theMichigan Estate Recovery Questionnaire must be completed and returned within 14 days, and further asserts that the state is a “known creditor” under Michigan’s probate law. The Notice of Intent to File Claim Against Estate offers the recipient the opportunity to receive anApplication for Hardship Waiver. The Application for Hardship Waiver is not provided unless requested, and according to the Notice of Intent, once requested and sent, the Application for Hardship Waiver must be completed and returned within 60 days in order to avoid denial of the requested hardship exemption(s).

Our firm is suggesting that our clients who receive a Notice of Intent to File Claim Against Estate to contact our office immediately upon receipt to request assistance if desired.

Lastly, new legislation has been recently introduced which eliminate the modest protections that now exist in the current estate recovery laws, and impose a more far reaching estate recovery system in Michigan, which could include recovery against jointly owned property, proceeds from life insurance paid to a beneficiary, etc. As these matters develop, we will certainly keep you apprised.

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