Medicaid Claims Against An Estate
Years ago, Medicaid rarely impressed a lien or filed a claim against an estate of a decedent who received benefits. Today, such liens and claims are commonplace, and it is important to have an understanding as to how this works.
10=Year PeriodIn New York, a creditor of a decedent can file a claim against the person's estate at any time up to seven months from the date of the appointment of an executor or administrator. Thus, most estates make only partial distributions to beneficiaries until that period ends. While a decedent's death does not revive a stale claim, Medicaid can make a claim that covers the past 10 years.
When a claim is interposed against an estate, the estate must make allowance for it. The claim is not automatically valid, but the estate cannot make distributions that would frustrate the claim if it were valid. To ignore a claim invites various repercussions, including personal liability.
When Medicaid makes a claim, two issues arise: Discharging the claim against the estate and the effect and of a Medicaid claim, and an interplay between those issues.
Quick Overview of MedicaidMedicaid began in 1965 with enactment of Title XIX of the Social Security Act. Administered by the Secretary of Health and Human Services, authority is exercised through the Centers of Medicare and Medicaid Services. Each state opts to participate in Medicaid. It is a joint federal/state program that funds medical care for persons unable to pay their own medical costs. Federal funds pay for between 50-83 percent of costs that the state incurs for medical care for a given patient. In return, the State pays Medicaid part of the costs and complies with requirements regarding eligibility determinations, information collection, and program administration.
Payor of Last ResortMedicaid is intended to be a "payor of last resort," and thus does not provide payment for medical services if other resources are available. Rather, federal law requires states to ascertain legal liability of third parties to pay for care and services available under the plan and to seek reimbursement from them. As a result, federal directives require that the State plan include assignment, enforcement, and collection mechanisms.
Thus, Medicaid seeks reimbursement of sums it paid; it does this through such methods as placing liens on real estate, estates, and personal injury and wrongful death judgments. Reimbursement claims of medical services payors have in recent years often changed the tenor of personal injury litigation.
Nature of a Medicaid LienThere is a statutory right of recovery that runs to the states and administered through local districts for medical assistance and other services. This right of recovery is asserted by notice of lien under section 104 of New York's Social Services Law, which allows a "public welfare official" to bring an action or proceeding against a person who has real or personal property, or against the estate or a fiduciary of the estate, and even against a decedent's "sucessors in interest" if decedent owned real or personal property, so long as the person received assistance during the prior ten years and can "recover up to the value of such property the cost of such assistance or care," (Social Services Law sec. 104(1)).
This is so because public assistance constitutes an "implied contract." Thus, "No claim of a public welfare official against the estate or the executors, administrators and successors in interest of a person who dies leaving real or personal property, shall be barred or defeated, in whole or in part, by any lack of sufficiency of ability on the part of such person during the period assistance and care were received."
The claim is not impaired or defeated by the fact that some other person or persons may also have been liable to contribute. That subsection makes clear that a public welfare official making these claims is "deemed a preferred creditor."
Protections & ExceptionsGeneral exceptions are as to funeral expenses, statutory commissions, and attorney fees. Thus, these expenses fall outside of the scope of a Mediciad lien or claim.
Other more specialized protections are built into SSL sec. 369, such as if the decedent had a child under age 21 or who is disabled, or if a sibling of the decedent has an interest in the home was residing there before the decedent was admitted to a medical institution. Of interest, that section also provides for protections in the case of "undue hardship," as determined by regulations, see SSL 369(5).