ESTATE RECOVERY OF CORRECTLY PAID MEDICAID
10:49-14.1 Recovery of payments correctly made
(a) Correctly paid benefits shall only be recoverable from
the estate of an individual who was 65 years of age or older when the
individual received medical assistance if:
1. The individual leaves no surviving spouse;
2. For estates of individuals who died between February 1,
1984 and October 20, 1992, the individual left no surviving child;
3. For estates of individuals who died on or after October
21, 1992, the individual leaves no surviving child who is under the age of 21
or any surviving blind or permanently and totally disabled children;
4. The amount to be recovered is in excess of $ 500.00;
and 5. The gross estate is in excess of $ 3,000.
(b) Paragraphs (a)4 and 5 above shall apply to recoveries
from the estates of individuals who died on or after July 20, 1981, but prior
to December 22, 1995.
(c) For estates of individuals who died on or after April
1, 1995, in addition to the recoveries authorized under (a) and (b) above, any
Medicaid payments correctly made on or after October 1, 1993, on behalf of
individuals who received services on or after age 55 but prior to age 65, are
recoverable from the estates of those individuals, subject to the conditions
set forth in (a)1, 3, 4 and 5 and (b) above.
(d) Effective for estates created on or after October 4,
1999, the Division shall file any claim or lien against an estate under this
section within 90 days after receiving actual written notice from the personal
representative of the estate or any other interested party of the death of the
Medicaid beneficiary.
(e) For estates of individuals who died on or after
December 22, 1995, Medicaid claims under this section shall be deemed preferred
claims, with a priority equivalent to that under subsection c. of N.J.S.A. 3B:22-2, that is, debts and taxes with
preference under Federal or State law.
(f) The personal representative of the estate of a
deceased Medicaid beneficiary or any other interested party, upon request to
the Division, may obtain a "payoff statement" on the amount due under
the claim, if that information is available to the Division at the time the
request is received.
(g) Effective for estates pending on or created after
October 4, 1999, if a family member of a deceased Medicaid beneficiary has,
prior to the beneficiary's death, continuously resided in a home owned by the
beneficiary at the time of the beneficiary's death, and that home was the
beneficiary's primary residence, and was and remains the family member's
primary residence, the Division may record a lien against the property, but will
not enforce the lien until the property is voluntarily sold, or the resident
family member either dies or vacates the property.
(h) For estates of individuals who died on or after
October 1, 1993, which are subject to a recovery claim under this section which
was either pending on or initiated after March 1,
Page 2
1995, the estate representative may apply to the Division
for a waiver or compromise of the claim based upon grounds of undue hardship,
subject to the following policies and procedures:
1. Undue hardship can be demonstrated only if the estate
subject to recovery is or would become the sole income-producing asset of the
survivors, and pursuit of recovery is likely to result in one or more of those
survivors becoming eligible for public assistance and/or Medicaid benefits.
2. There shall be a rebuttable presumption that no undue
hardship exists if the hardship resulted from estate planning methods under
which assets were divested in order to avoid estate recovery.
3. Upon receipt of written notice that the estate is
subject to a recovery claim by the Division, the estate representative shall
have 20 days from the date of receipt of the notice to file a request for a
waiver or compromise of the Division's claim based upon undue hardship, together
with evidence in support of the request. If that request is not received by the
Division within the time limit specified, the Division shall not grant a waiver
or compromise based upon undue hardship. Upon receipt of a timely request, the
Division shall evaluate the request and the evidence submitted, and shall
notify the applicant in writing of its decision within 45 days from the date
that the request was received. If the estate representative wishes to contest
the Division's decision, a written request for a hearing shall be submitted to
the Division within 20 days from the date of receipt of that decision, in
accordance with the provisions of N.J.A.C. 10:49-10. This request shall be
forwarded by the Division to the Office of Administrative Law (OAL), which
shall notify the parties of the hearing date and venue, and shall provide a
description of the hearing process. Subsequent to the hearing, the formal
decision of the OAL shall include a description of the process leading to the
final agency decision and the appeal rights available to both parties.
(i) The Division may elect not to pursue a claim under
this section against the estate of an individual who died on or after December
22, 1995, if it determines, in its sole discretion, that to do so would not be
cost-effective.
(j) For all estate recoveries pending on or initiated
after October 4, 1999, no lien of any kind, inchoate or otherwise, and no right
of recovery can either exist or be pursued until all of the conditions set
forth in N.J.S.A. 30:4D-7.2a are met, including
the absence of any surviving spouse or of any minor, blind, or permanently and
totally disabled children.
(k) For all estate recoveries pending on or initiated on
or after October 4, 1999, even when the statutory conditions for lien filing
and recovery are met, recovery shall not be pursued against property held by
any bona fide purchaser who has paid fair market value for the property, but
shall be sought from the estate.
(l) For purposes of this section, the term
"estate" with respect to a deceased Medicaid beneficiary shall
include:
1. All real and personal property and other assets
included within the individual's estate, as defined in N.J.S.A.
3B:1-1; and
2. For individuals who died on or after April 1, 1995, the
term "estate" shall also include any other real and personal property
and other assets in which the Medicaid beneficiary had any legal title or
interest at the time of death, to the extent of that interest, including assets
conveyed to a survivor, heir or assign of the beneficiary through joint
tenancy, tenancy in common, survivorship, life estate, living trust or other
arrangement, as well as any proceeds from the sale of any such property which
remain in the estate of the survivor, heir or assign of the beneficiary, to the
extent of the beneficiary's interest;
Page 3
i. Effective for future estates or estate recoveries
pending on or after October 4, 1999, for purposes of this subsection, the term
"life estate" shall mean a life estate created upon the death of a
beneficiary;
ii. Effective for future estates or estate recoveries
pending on or after October 4, 1999, for purposes of this subsection, the term
"other arrangement" shall include, but not be limited to, any trust
or annuity in which the beneficiary had an interest at the time of death,
including a trust or annuity established by a third party, subject to the
exclusions discussed in (n) below.
(m) Any lien filed on or after October 4, 1999 against an
estate as described in (l)2 above shall describe the extent of the deceased
Medicaid beneficiary's interest covered by the lien, if known to the Division
at the time the lien is filed. For example, if a deceased Medicaid beneficiary
at the time of his death owned real property as a tenant-in-common with another
individual, the lien should state that it encumbers only 50 percent of the
equity in the real property. If the deceased Medicaid beneficiary held a
tenancy-by-the-entirety or joint tenancy with a right of survivorship, then the
lien shall state that it encumbers all of the property. If the Division is not
aware of the extent of the beneficiary's interest at the time that the lien is
filed, the full amount of the Division's claim shall be listed on the lien.
(n) For purposes of this section, for future estates or
estates pending on or after October 4, 1999, the term "estate" shall
not include:
1. A life estate in which the beneficiary held an interest
during his or her lifetime, but which expired upon the Medicaid beneficiary's
death;
2. An inter vivos trust established by a third party for
the benefit of the now-deceased Medicaid beneficiary, provided that:
i. The trust is a discretionary trust, constructed in such
a way that the Medicaid beneficiary could not compel distributions from the
trust; and
ii. The trust contains no assets in which the Medicaid
beneficiary held any interest within either five years prior to applying for
Medicaid benefits, or five years prior to the Medicaid beneficiary's death; or
3. A testamentary trust established by a third party
(including the spouse of the now- deceased Medicaid beneficiary) for the
benefit of the now-deceased Medicaid beneficiary, provided that:
i. The trust is a discretionary trust, constructed in such
a way that the Medicaid beneficiary could not compel distributions from the
trust; and
ii. The trust contains no assets in which the Medicaid
beneficiary held any interest within either five years prior to applying for
Medicaid benefits, or five years prior to the beneficiary's death. Assets of
the community spouse, which formed a part of the community spouse resource
allowance, shall not be considered assets of the Medicaid beneficiary. Any assets
of the community spouse other than those that formed part of the community
spouse resource allowance shall be considered assets of the Medicaid
beneficiary if acquired from the Medicaid beneficiary within five years prior
to the date of application for Medicaid benefits or five years prior to the
date of death of the Medicaid beneficiary.
The New Jersey Medicaid Program and Estate Recovery-What You
Should Know
What is Estate Recovery?
Under federal and New Jersey law, the Division of Medical
Assistance and Health Services (DMAHS) is required to recover funds from the
estates of certain deceased medical assistance clients or former clients for
all payments provided through the Medicaid program for services received on or
after age 55.
Why Estate Recovery?
The State pursues recovery from estates to supplement funds
available for medical assistance programs and limit the burden upon taxpayers
caused by rising medical costs. Funds recovered help provide assistance to
others in need.
Who is Affected?
The estates of clients or former clients who were 55 years
of age or older at the time they received services may be affected.
Will the State Seek Recovery Immediately Upon Death?
Yes, if the deceased has no surviving spouse and has no
surviving child under age 21 and no surviving child who is blind or permanently
and totally disabled. The only time that recovery will not be pursued is:
1. 2.
3.
If it would not be cost-effective to do so; or
If property in the estate is the sole source of income for
one or more of the survivors and pursuit of recovery is likely to result in one
or more of those survivors becoming eligible for public assistance and/or
Medicaid benefits; or
If a family member of a deceased Medicaid client has, prior
to the client’s death, continuously resided in a home owned by the client at
the time of the client’s death, and that home was the client’s primary
residence, and was, and remains, the family member’s primary residence, the
Division may record a lien against the property, but will not enforce the lien
until the property is voluntary sold, or the resident family member either dies
or vacates the property.
When will the State not seek recovery immediately
upon death?
The State will not seek recovery if there is a surviving
spouse or a surviving child who is under the age of 21, or is blind or
permanently and totally disabled. In that case, repayment would be postponed
until:
1.
The
child reached the age of 21, or
2.
The
time of the spouse or child’s death.
When any of these exceptions to DMAHS’ right to recover from
an estate no longer apply (i.e., as a result of the death of a surviving
spouse, attainment of age 21 by a surviving child, and/or death of a blind or
permanently and totally disabled child), DMAHS has a right to recover from any
remaining estate assets at that time.
What is an Estate?
An estate includes any property that belonged to the
deceased at the time of death. By law, estates include property such as the
decedent’s home or share of a home, bank accounts (whether solely or jointly
held), trusts and annuities, stocks and bonds, and any other real or personal
property. It is important to understand that even though the deceased’s share
of property may pass to the survivor(s), it continues to be considered as part
of the estate for New Jersey Medicaid recovery purposes.
What About Life Insurance Policies?
Proceeds from life insurance policies are considered the
assets of the named beneficiaries. Proceeds will be considered recoverable only
when they are paid to the client’s estate as the named beneficiary or as a
default beneficiary when another named beneficiary predeceases (dies before or
at the same time as) the client.
What About Annuities ?
Annuities, which are determined not to be subject to asset
liquidation prior to eligibility, must name the State of New Jersey as the
remainder beneficiary in the first/primary position for the total amount of
medical assistance paid on their behalf at any age. In the case where there is
a community spouse and/or a minor or disabled child, the State must be named in
the second/secondary position as remainder beneficiary. The State or its
eligibility agencies shall require verification of the State being irrevocably
named as the remainder beneficiary in the correct position. As the beneficiary
of the annuity the State is paid any remaining income/principal upon the death
of the client per the primary or secondary terms of the annuity contract.
What About Burial Trusts?
Under New Jersey law, P.L. 1999 Chapter 193, funeral
directors and insurers issuing policies covering funeral expenses are required
to forward to DMAHS any dollars remaining in a Medicaid client’s irrevocable
funeral trust fund or burial insurance policy after reasonable funeral expenses
have been paid, but only if the deceased was receiving Medicaid or public
assistance benefits at the time of death.
What About Medicare Cost-Sharing Benefits?
Effective January 1, 2010, Medicare cost-sharing benefits
paid by Medicaid under the Medicare Savings Programs are not subject to estate
recovery.
What Should I Know About Medicaid Liens? Will the Medicaid
Program File a Lien Against My Home and Property?
A Medicaid lien is a claim placed against a deceased
person’s property to ensure that the estate pays a debt.
When you apply for Medicaid, a lien is not filed against
your property. A lien is placed on property after the death of a Medicaid
client or former client who received services on or after age 55 if there is no
surviving spouse, no surviving child under 21 years old, and no surviving child
who is blind or totally and permanently disabled. The amount claimed as a lien
will be equal to the amount of all assistance DMAHS provided to a Medicaid
client for services received on or after age 55, including any capitation
payments made to an HMO on the client’s behalf by the Medicaid program.
What Expenses Can Be Paid With Assets of the Deceased Before
Paying Medicaid?
Reasonable funeral expenses, costs and expenses
related to the administration of the estate, and debts owed to the Office of
the Public Guardian for Elderly Adults can be paid with the assets of the
deceased. DMAHS’ claim is next in line, together with debts and taxes with
preference under federal or New Jersey law.
How Will the Estate Know Money is Owed?
Those involved in handling the estate must contact DMAHS in
writing as soon as possible after the death of the Medicaid client or former
client. It is their responsibility to notify DMAHS to find out if DMAHS has a
claim against the estate before any funds from the estate are spent (exception:
reasonable funeral expenses may be paid). Distributions to any creditors or
heirs cannot be made until the estate reimburses DMAHS if there is a Medicaid
claim. Whoever is handling the estate should write to:
DMAHS
Office of Legal and Regulatory Affairs Attn: Estates
PO Box 712 - Mail Code #6
Trenton, NJ 08625.
DMAHS by law has 90 days from the date of receipt of the
estate representative’s letter to advise if it will be seeking recovery.
If you have any questions regarding estate recovery or need
more information about estate recovery, please call 609-588-2900.
(Use Eligibility Agency Letterhead)
ESTATE RECOVERY ACKNOWLEDGEMENT FORM
I, (Name of applicant, client or legal representative), do
acknowledge notice that the Division of Medical Assistance and Health Services
has the authority to file a claim and lien against the estate of a deceased
Medicaid client or former client to recover all Medicaid payments for services
received on or after age 55, including all capitation payments to any managed
care organization, when there is no surviving spouse, no surviving children
under the age of 21, and no surviving children of any age who are blind or
permanently and totally disabled.
I also acknowledge notice that my estate may be required to
pay back the Division of Medical Assistance and Health Services for those
benefits.
I do hereby acknowledge receipt of the estate recovery
notice provided by the Authorized Eligibility Agency for the NJ Division of
Medical Assistance and Health Services this _______ day of _______________ ,
20____.
Signature of applicant/representative Printed name of
applicant/representative
