Georgia Medicaid Estate Recovery
Medicaid estate recovery is a principal concern for every elder lawyer. This article examines the popular flawed strategy of renouncing an inheritance to avoid a spouse's assets from being counted for Medicaid.
O.C.G.A. 49-4-147.1 and You.Medicaid estate recovery, found at O.C.G.A. ? 49-4-147.1, gives the State of Georgia the right to send your heirs a bill for medical services provided on your behalf after you pass. Suppose, for example, you have a $250,000 house that you intend to pass to your two children. Further assume that you are in a nursing home for 12 months prior to your passing and receive Medicaid services totaling $60,000. The executor of your estate would be required to repay Georgia's Department of Community Health $60,000 from your estate. This generally requires the executor to sell your home in order to cover the bill.
Medicaid Estate Recovery PlanningProper Medicaid planning can restrict Georgia's ability to send a bill to your children for your medical services. Suppose, however, that you expect to receive a large inheritance upon the passing of your spouse that would make you "too rich" for Medicaid. Can you simply forego the inheritance, allow the assets to pass to your children, and qualify for Medicaid? Probably not. The case of DCH v. Medders involved a spouse who renounced her inheritance from her husband so that she could qualify for Medicaid to pay for her nursing home bills. The reason she did this is because nursing homes charge less money for clients who are on Medicaid than private paying clients. The problem is that the spouse renounced her inheritance six months after the passing of her husband. Although Georgia law allowed her the legal right to renounce her inheritance and be treated as if she predeceased her husband, this did not prevent the DCH from imputing these assets to the spouse.
Medders ResultIn other words, this case reveals a gap between probate and estate planning techniques and Medicaid asset protection considerations. The DCH argued that since the renunciation occurred within the Medicaid look back period, that the assets were countable for Medicaid purposes. The Georgia Court of Appeals agreed and held that the assets created a transfer penalty for the spouse. The Medders Court did not directly address the issue of whether renouncing the inheritance at an earlier date would have precluded the DCH from its ability to recover the spouse's assets. The court hints that renouncing an inheritance at an earlier date, outside of the Medicaid look back period, would have prevented the DCH from being able to impose a time penalty on the spouse. The real value of this case is that it demonstrates how proper planning in advance can save estates hundreds of thousands of dollars. At issue in this case was over $500,000 that the DCH wanted to claim under the estate recovery statute. An elder law attorney could have saved this money in a variety of ways. For example, the spouse could have entered into a personal care contract with her children. Or she could have executed equity stripping strategies to render the estate "worthless" for estate recovery purposes but keep all of the money in the family.