Medicaid Estate Recovery
The Medicaid Estate Recovery Program (MERP) seeks to recover the costs of Medicaid benefits paid on behalf of a recipient aged 55 or older from the deceased recipient’s estate.
Target and Scope of Recovery
New Jersey utilizes an Expanded Estate definition, which covers a broader range of assets beyond just Probate Assets. This means that assets such as joint accounts, life insurance, and retirement pensions—which might otherwise pass directly to heirs without a will—can be subject to recovery.
- Included Assets:
- Real Estate: The home (including Primary Residence) and land held in the deceased’s name.
- Financial Assets: Bank accounts, stocks, bonds, and cash.
- Non-Probate Assets: Life insurance proceeds (if paid to the estate), annuities, trust assets, and jointly owned property.
*Notice Regarding Life Insurance: Life insurance proceeds paid directly to a designated beneficiary are generally not subject to estate recovery. However, recovery will apply in the following cases:
- Estate as Beneficiary: If the estate itself is named as the beneficiary.
- Lapsed Beneficiary: If the designated beneficiary predeceases the recipient, causing the insurance proceeds to revert to the estate.
- Recoverable Amount: All medical costs paid by Medicaid after the recipient reached age 55 (including monthly HMO capitation fees).
*Exception: As of January 1, 2010, Medicare cost-sharing expenses paid by Medicaid through Medicare Savings Programs (such as QMB) are exempt from estate recovery.
- Minimum Threshold: Estate recovery may be waived if the claim amount is less than $500, if the total value of the estate is less than $3,000, or if the cost of recovery would exceed the amount to be recovered.
Conditions for Deferment or Waiver
- Surviving Spouse: Recovery is indefinitely deferred as long as the spouse is alive.
- Minor Child: Recovery is deferred if there is a surviving child under the age of 21.
- Disabled Child: Regardless of age, recovery is deferred if you have a child who is determined to be blind or permanently and totally disabled according to SSA standards.
- Caregiver Child Exception: The recovery of the home may be waived if the child has resided in the parent’s home for at least two consecutive years immediately prior to the parent’s admission to a nursing facility and can prove that they provided a sufficient level of care to allow the parent to remain at home rather than entering a facility.
*Note: The child may have outside employment or income, and care provided alongside a home health aide is still eligible for consideration. The child does not need to be the sole caregiver; the decision is based on the quality and scope of care provided. Strict documentation, such as a physician’s statement, is required.
- Sibling Exception: An exemption for the home may be granted if the beneficiary’s sibling holds an equity interest in the property and resided in the home for at least one year immediately prior to the beneficiary’s admission to a nursing home.
- Undue Hardship Waiver: You may apply for a waiver if the assets subject to recovery are the sole source of income for a surviving family member, and if the recovery would likely force that family member to rely on public assistance (including Medicaid). However, if assets were transferred in advance for the purpose of avoiding Medicaid recovery, a rebuttable presumption applies that no undue hardship exists, which may result in the waiver request being denied.
*A written request for a waiver must be submitted within 20 days of receiving the notice of recovery claim from the DMAHS. Failure to meet this deadline may result in the denial of your waiver request.
Key Notes
- Prior Notification: Before distributing estate assets to heirs or other creditors, the estate executor (representative) must notify the NJ DMAHS Estate Recovery Unit in writing to confirm if there is an outstanding claim. DMAHS will initiate the initial claim process within 90 days of receiving written notice, and the final claim or lien filing will occur within three years from the date of receipt of the written notice.
- Funeral Expenses: Before Medicaid estate recovery proceeds, the following items may be paid from the estate assets with priority:
- Reasonable funeral and burial expenses
- Reasonable costs and fees related to the administration of the estate
- Debts owed to the Office of the Public Guardian for Elderly Adults
- DMAHS recovery (processed only after the above items have been settled)
- Deferral of Lien Enforcement for Residing Family Members: If a family member has continuously resided in the home since before the beneficiary’s death, and the home was the beneficiary’s primary residence and remains the primary residence of that family member, DMAHS may record a lien on the property. However, it will not enforce the lien until the family member moves out, passes away, or the property is voluntarily sold.
Contact
- Direct Line for Inquiries: NJ DMAHS 1-609-588-2900 / 1-609-588-3016 – Direct line for all inquiries regarding Trusts, Liens, and Estate Recovery.
- General Inquiries & Information: NJ FamilyCare 1-800-701-0710 – For general guidance
- Mailing Address for Document Submission (Estate Unit):
NJ DMAHS – Office of Legal and Regulatory Affairs
Attn: Estates
P.O. Box 712, Mail Code #6 Trenton, NJ 08625-0712 - AWCA provides expert consultations free of charge (201-862-1665 / info@awcanj.org)
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