Losing Your Home to the Medicaid Claw back

More than half a million people receive Medicaid services in Colorado. Medicaid services cover a variety of programs including payment for long term care, in home care services and health insurance through Health First Colorado. The services paid by Medicaid are critical to many low income and disabled individuals. Due to the programs complexity it is possible to not be aware that you are receiving Medicaid benefits.

Many people who receive Medicaid services, paid by Medicaid, do not know that Federal law requires all states to have an "estate recovery program. " Estate recovery programs will seek to recover money to be paid back to the state for Medicaid services provided. The State of Colorado contracts with Health Management Systems (HMS) to administer the estate recovery program.

When a person dies who has received Medicaid services HMS will determine if there are any estate assets to collect. Often the primary estate asset is the deceased person’s home. Although HMS is prohibited from taking a person’s home while they are living or survived by a spouse, claims for reimbursement are often in the hundreds of thousands of dollars. There are no time limits for HMS to seek reimbursement. Medicaid may have paid for services years ago that family members did not know about when the person dies, the family is devastated to learn that their family home must be sold to pay back Medicaid.

Cindy contacted my office after her father, Robert, passed way unexpectedly. Cindy was Robert’s only child. Due to chronic health problems, Robert had lost his job when he was 58. A year later, Robert fell and fractured his hip and was taken to the hospital. Since Robert did not have health insurance at the time of his fall, the hospital enrolled him in Medicaid health insurance through Health First. After surgery, Robert had multiple hip complications that required additional surgeries. Robert was in constant pain so Cindy quit her job and moved in full time to take care of him. Two years later Robert died. As Robert’s only family member, Cindy was expecting to inherit the house and start he life over. Six months after Robert died Cindy received a letter from HMS that begin with "We have been informed of the death of the above person, and we wish to express our sincere condolences.” The letter went on to state that Medicaid had paid $235,785 for medical care for Robert. Cindy had no idea that Robert was receiving Medicaid health insurance and did not know that Medicaid would file a claim against Robert’s estate for reimbursement. Since Robert did not have any money, Cindy was left with no choice but to sell her family home and pay off Medicaid with the proceeds. Cindy’s plan on living in the home that she grew up in was gone.

Medicaid is treated as a super creditor of the estate. Only estate administration expenses can be paid prior to paying the Medicaid claim. Anyone serving as personal representative can be personally liable to Medicaid if the Medicaid claim is not paid from the estate proceeds. In most cases, the home must be sold to pay the amount due Medicaid forcing family members to find alternative housing.

Estate recovery rules are complex but there are legal avenues available to eliminate an estate recovery claim. For example, in Colorado estate recovery can occur against property that passes through a person’s probate estate. Property that is titled in joint tenancy does not pass through probate. For certain Medicaid programs, changing ownership of a person’s home or adding a person as a joint owner will disqualify the person receiving Medicaid for five years. For other Medicaid programs, the five-year rule does not apply.

When a person starts receiving Medicaid benefits, Medicaid is required to provide written notice of its right to recover against a person’s estate. Since most correspondence from Medicaid is confusing, families are caught unaware by Medicaid estate recovery notices. Most people do not read or understand the fine print informing them of Colorado’s estate recovery act. Identifying Medicaid services can be more difficult when the person receiving services is also eligible for Medicare. Unlike Medicaid, Medicare does not seek reimbursement for covered medical expenses.

It is important to consult with a certified elder law attorney (CELA) who can explain your legal rights and advise on how to protect your home. Take these steps before it is too late.