Medicaid Estate Recovery

Medicaid Estate Recovery

Medicaid Estate Recovery is the process by which the State of Indiana seeks to recover amounts paid by Medicaid on behalf of a qualified individual. When a Medicaid recipient dies, the State of Indiana is required by federal and state law to seek recovery from their estate funds equal to the amount used to pay for their medical expenses, including capitation payments made to a managed care entity on behalf of a member of the Healthy Indiana Plan. Any funds recovered through the estate recovery process are then used to help provide for future Medicaid recipients. The Indiana Family & Social Services Administration Estate Recovery Program is the entity that administers the estate recovery process for the State of Indiana. The Estate Recovery Program will seek to recover the total amount Medicaid has paid on behalf of recipients after they turned 55-years-of-age, and in certain other limited circumstances.

Frequently Asked Questions

What is an estate?

For Medicaid Estate Recovery purposes, an estate consists of the assets and property owned by the Medicaid recipient at the time of his or her death. This includes all real and personal property included within the Medicaid recipient’s probate estate. The term estate also includes “non-probate assets,” which is any real and personal property that is conveyed through a “non-probate transfer.”

What assets can be recovered?

The following are some of the types of assets that the Estate Recovery Program can seek to recover:

• Real property, including property conveyed to the recipient’s survivor through joint tenancy with right of survivorship.
• Money remaining in the recipient’s bank account regardless if the account has a payable on death provision or has a joint owner.
• Money remaining in a recipient’s nursing home account.
• Funds remaining in a Qualified Income Trust, also known as a Miller Trust, as of the date of death.
• Funds remaining in a funeral trust after the funeral has been paid for in full.
• Annuities purchased after May 1, 2005, including annuities that do not designate the State of Indiana as the beneficiary.
• Assets in a revocable trust if the assets were transferred into the trust after May 1, 2002.

Are there assets that cannot be recovered?

Yes. There are a number of assets that cannot be recovered. These may include

• The proceeds of a life insurance policy that names a beneficiary.
• Real property held by a Medicaid recipient that is subject to a life estate.
• Non-probate assets that were transferred out of the probate estate before May 1, 2002.
• The sum due from an annuity contract purchased before May 1, 2005.
• Personal effects, ornaments, or keepsakes of the Medicaid recipient.
• Assets protected by an Indiana Partnership Long Term Care Insurance Policy (see below for link to the Indiana Long Term Care Insurance Program).
• All of a recipient’s assets so long as the Medicaid recipient is survived by a spouse, a child under 21 years of age, or a child is who disabled or blind.

Is a recipient’s house and real estate subject to Medicaid Estate Recovery?

Yes. A Medicaid recipient’s house and real estate may be subject to estate recovery. This includes a house owned by a Medicaid recipient which at the time of death was conveyed to another individual through joint tenancy with right of survivorship, if the joint tenancy was created after June 30, 2002.

Are there exceptions to Medicaid Estate Recovery?

The State will not seek recovery if it will result in a substantial and undue hardship for the surviving beneficiaries of the decedent’s estate. To be eligible for an undue hardship waiver, a beneficiary must be a member of the immediate family of either the deceased recipient or the deceased recipient’s spouse. Applications for an undue hardship waiver may be requested by phone at 877-267-0013 or via email at EstateRecovery@fssa.in.gov and must be submitted within 90 days of the date of the claim. Applications can also be downloaded from the FSSA website (see below for link).

Can other expenses be paid before the State of Indiana’s Estate Recovery Program claim?

Yes and no. When the State has a claim against a Medicaid recipient’s estate, the claim has a preferred status. This means that the State’s claim is to be paid in full before other debts are paid or distributions are made to the Medicaid recipient’s heirs.  There are, however, some expenses that can be paid before the State’s claim is paid.  These expenses include expenses of administration, funeral and cemetery expenses up $2,150, and may include certain expenses of the Medicaid recipient’s last illness. However, funds remaining in a Qualified Income Trust (QIT or Miller trust) cannot be used to pay such expenses.

Are there time limitations as to when the State can seek recovery?

The State may have up to nine months after the Medicaid recipient’s death to seek recovery of assets not included in the recipient’s probate estate, or longer under certain limited circumstances. This time limit does not apply to assets not reported to the county office of the FSSA’s Division of Family Resources. This can include assets that were transferred by way of a Transfer on Death deed or other transfer completed during the Medicaid recipient's life while on Medicaid, or after the Medicaid recipient's death and not included in the Medicaid recipient's probate estate. The State of Indiana is not barred by any time limitations when filing a claim against a probated estate. The State can file a claim so long as the probate estate is open.

How can I find out how much the State of Indiana is seeking to recover?

The Estate Recovery Program can provide the amount of the State’s claim upon request. The program will determine the claim amount by calculating the total amount of medical expenses paid on behalf of a Medicaid recipient after they turned 55-years-of-age. Medicaid providers have one year from the date of death to file a claim for payment from Medicaid. Therefore, the amount of the claim may continue to increase after death and a current claim amount should be requested prior to making any payment. Claim inquiries can be made at 877-267-0013 or EstateRecovery@fssa.in.gov.

How is a payment made?

Payments can be in the form of personal check, money order, or cashier’s check and made payable to the: “Treasurer, State of Indiana.”

To ensure that the checks are successfully processed, DO NOT USE light colored ink when issuing the check. Black or dark blue ink are required.

CHECKS WRITTEN IN LIGHT COLORED INK WILL BE RETURNED TO THE SENDER.

Is there a way to contact the Estate Recovery Program to report the death of a Medicaid recipient, the opening of an estate, or if I have any other questions about the Medicaid Estate Recovery process?

General inquiries can be sent via U.S. Mail to the address above used for payment, by telephone at 877-267-0013, and by email at EstateRecovery@fssa.in.gov. Notices of administration for opening a probate estate shall also be sent via. U.S. Mail to the payment address above.

Suggested Links:

Federal estate recovery statute: http://www.gpo.gov/fdsys/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap7-subchapXIX-sec1396p.pdf

Indiana Code (Estate Recovery): http://iga.in.gov/legislative/laws/2020/ic/titles/012/#12-15-9

Indiana Administrative Code: http://www.in.gov/legislative/iac/T04050/A00020.PDF

Indiana Medicaid: http://www.in.gov/medicaid/

Indiana Long Term Care Insurance Partnership Program: http://www.in.gov/iltcp/

Application for Medicaid Estate Recovery undue hardship: http://www.in.gov/fssa/ompp/3446.htm