Your mother is in a nursing home and has qualified for Connecticut Title 19 Medicaid. She’s been able to keep her home because it is an exempt asset so long as she is living and intends to return home. But what happens to the house after she dies?

What if it was your spouse on Medicaid and the state has paid over $70,000 in benefits?

Will they attempt to recover benefits upon your spouse’s death?

After a Connecticut Title 19 Medicaid benefits recipient dies, the state has the right to recover any assets remaining in order to reimburse itself for Medicaid benefits paid out. This process is called estate recovery. Certainly, it makes sense from a public policy standpoint—-if the state is going to help pay for a resident’s care while they are living, then the state should be reimbursed, as fully as possible, by any assets remaining at the resident’s death. But while this policy may make sense, families are never happy to learn that the state may put a lien on your/your parent’s home after your spouse/parent dies.

At one time, states were only pursuing certain real and personal property the Title 19 Medicaid recipient had titled in their name, alone. But now states are taking advantage of the Federal laws expanded definition of “estate” that allows the states to recover most assets in which the Medicaid recipient has an ownership interest including jointly owned property, property held in trust, life estates, and life insurance proceeds. The states also have the right to recover assets conveyed at the Medicaid recipient’s death through transfer on death deeds or beneficiary designations.

In addition, states are now placing liens on the Title 19 Medicaid recipient’s home. This is a way for the state to secure a debt against the Medicaid recipient’s property, meaning that the property can not be sold or transferred until the lien is satisfied. However, the state will only place a lien on the home if Medicaid has paid for at least six months of nursing home care. The state would then inform the Medicaid recipient or the family before a lien is imposed and the family would have the chance to appeal the action.

Fortunately, the state will not place a lien on the home if the Title 19 Medicaid recipient’s spouse, minor child, or disabled child is still living in the home. Nor will the state place a lien on the home if the Medicaid recipient’s doctor thinks he or she may be able to go home. In fact, the federal government requires states to waive recovery all together if recovery would cause undue hardship (as determined by the state).

There are still, in certain circumstances, perfectly legal ways of avoiding estate recovery. For example, if mom is the Title 19 Medicaid recipient, and she has a child with a qualifying disability, she may be able to give her home to that child penalty free and avoid estate recovery at her death. Also, if mom has a child who moved into her home with her, cared for her, and that care kept her out of a nursing home for at least two years, then mom can transfer her home to that child, penalty free, and avoid estate recovery. This is called the caretaker/child exception. There may also be other strategies to consider for avoiding estate recovery including purchase of the home by family members or, perhaps, even using a reverse mortgage.

Connecticut Title 19 Medicaid estate recovery rules are complicated and change frequently. You should consult an Elder Law Attorney who practices in the area of Medicaid before drafting your estate plan with the intent of qualifying for Medicaid with the hopes of avoiding estate recovery. Plan today to protect yourself tomorrow.

Nobody can ever say I don’t shout from the rooftops that Connecticut has waged war on the middle class that needs Medicaid to pay outrageous nursing home costs. Another year is coming to an end and the legislature has further restricted eligibility.

The sophisticated technique of Spousal Refusal came to Connecticut in 2004 and was affirmed in federal appeals court in 2005. In 2007 we have the wrath of the CT legislature.

As a background, there is a very specific loophole in the federal Medicaid statute which allows the Community Spouse to keep a significant number of assets if the Medicaid applicant assigns his or her right of support to the State.

The legislature decided to attack this loophole by restricting the conditions under which the Medicaid applicant is allowed to assign his or her right of support. This is found in C.G.S. 17b-285 (Effective July 1, 2007).

First, an assignment of support is no longer required if the Community Spouse is unwilling or unable to provide information. Previously the assignment was required.

Second, the applicant spouse must not have resources himself in excess of eligibility standards. This is not a huge change, although it can certainly trip up the unwary.

Third, the Community Spouse must be unable to provide information required to determine eligibility. What did they change? Previously the Community Spouse could be unwilling to provide information and the family could still use an assignment to fit in the federal loophole. It seems that is no longer an option.

This is another attack on crisis Medicaid planning. Pretty soon there won’t be any options for a family once the crisis hits at the rate our legislature is churning out new restrictions. The message is clear, act today to protect yourself tomorrow. Early panning has a much better success rate than crisis planning.

The issue of gifts and penalties for Connecticut Title 19 Medicaid keeps coming up on a regular basis in recent meetings so I thought I would take a moment to specifically answer some of the common issues.

First – any transfer of any asset within five years of applying for Connecticut Title 19 Medicaid benefits creates a penalty period of ineligibility. There are a few very narrow exceptions of transfers that do not create a penalty, however the burden is on you to establish by the evidence that you qualify within one of the exceptions. Now let’s go over some basics.

You will notice all types of transfers are included in the rule. Be it writing a check payable to someone, handing them cash, signing a deed over to someone etc. As it says, any and every transfer is included in the scope of the rule. A simple way to look at it is if the person gives away an interest and access to property, you are at risk for your transaction being labeled a penalizing transfer and resulting in a period of ineligibility for Connecticut Title 19 Medicaid benefits.

One popular transaction that comes up often is taking a joint account and removing the Medicaid applicant’s name from the account. This is a gift. The Medicaid applicant had unrestricted access to the full value of the account on one day and after his or her name was removed from the account they no longer had access to the account. This transaction results in a period of ineligibility.

Another popular question concerns Medicaid penalties and annual exclusion gifts. For tax purposes, each person is allowed to gift a certain value to any person tax free. That is where the annual exclusion gifts end, for tax purposes only. In the context of a Connecticut Title 19 Medicaid application, a gift that you made which is tax-free can very well be (and almost always is) a gift subject to penalties for Medicaid eligibility purposes.

Another example are special occasion gifts such as birthdays and graduations etc. There is no exclusion for these types of transfers no matter how noble or small they may be. Any and every gift is subject to the penalty period of ineligibility rules whether it is $5,000 or $500.

If you are considering a strategy of stonewalling the Department of Social Services by denying information think again. You bear the burden of proving your eligibility. If the law presumes a transfer is a penalty and you do not prove otherwise you will be denied benefits. A Connecticut Medicaid Attorney can help protect as much value as you are entitled to, without the negative consequences of ill-conceived transfers.

Next week I begin my Title 19 Medicaid Asset Protection Workshop. There are still some spots available. I encourage every family that is currently facing or may face a nursing home issue in the next 6 years to take advantage of this opportunity. You can learn how my comprehensive step-by-step program can protect everything you are entitled to protect. You can find the details here.

This is not a seminar. You will not sit among a crowd of 20+ people and listen to a lecture covering topics you may or may not be interested in. You will be able to ask your questions and get answers. This workshop is one family at a time and only covers issues that are relevant to your situation. At the conclusion of each workshop, I provide the family with a complimentary risk assessment.