Medicaid in Arizona provides health care assistance for lower-earning residents, disabled people, the elderly, families and children. According to federal law, each state in the U.S. has a Medicaid estate recovery system. This program applies to people who have received Medicaid (also known as ALTCS in Arizona) before and are older than 55 or permanently institutionalized. 

If you fit into one of these categories, then your estate might encounter a “death tax” or Medicaid lien once you pass on. Getting Medicaid benefits can help you bypass the need to sell your house to cover your long-term care costs. However, this doesn’t automatically mean your home is protected; it just means you’re not required to sell it while you’re still alive. In some cases, you may benefit from a legal professional’s advice.

What Happens Once a Medicaid Recipient Passes?

  • When an elderly Medicaid recipient passes on, the state will attempt to recover reimbursement for care costs
  • In some cases, Medicaid is allowed to take your house after death
  • Some exceptions exist for which assets the state can recover
  • Working with an attorney can help you qualify for Medicaid or protect certain assets 

The state pays significant sums to cover healthcare costs for Medicaid recipients and may need to seek out reimbursement. There are at least two ways these costs may be recovered, such as property liens and estate recovery. Property liens could lead to a recipient losing their home. So, this means that Medicaid can take your home after death.

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What is Estate Recovery?

Estate recovery is part of the federal Medicaid laws in each state. When an ALTCS recipient who is older than 55 passes on, the state will attempt to receive reimbursement for healthcare costs from their estate, for the benefits that individual received. There are a few exceptions to this standard, in which states cannot recover costs for Medicaid. Here are some examples: 

The Deceased Person’s Spouse is Still Alive

If their spouse is still alive, the state may not recover the deceased person’s former home. This applies no matter where the spouse lives at the time.

The Person’s Child Served as a Caregiver

If the deceased person has a child who lived in their home for a minimum of two years before the deceased person passed on, the state may not be able to recover costs. The child must still reside in the home and be able to prove that they provided care that delayed the deceased person’s institutionalization, for this exception to apply.

There’s a Disabled, Blind, or Minor Surviving Child

If there’s a surviving child who is disabled, blind, or younger than 21, the state cannot go after the deceased person’s former home after they pass on. This also applies regardless of where the surviving child is living.

The Deceased Had a Live-In Sibling Caregiver

If the deceased person’s sibling lived in the home during the year before institutionalization and still lives in the house with an equity interest in the property, the state can’t go after the home.

Recovery Will Bring Undue Hardship

Medicaid might waive recovery if the process will bring undue hardship to the heirs of the deceased. To prove that you’d suffer undue hardship, you’ll need to make an argument in writing and include financial information that proves it.

Property Liens and Medicaid Recovery

Arizona can choose to place a lien on the home of the Medicaid recipient while they’re still alive, unless there are certain dependent people living there. A lien is method for securing payment for an obligation or debt through a security interest applied to property. The person who benefits from the lien is the lien holder or lienor, while the person who owns the property and grants the lien is called the lienee.

If the property is sold while the Medicaid recipient is still alive, they might lose their coverage due to excess assets and the obligation to cover the lien using the sale proceeds. The recipient isn’t obligated to satisfy the lien if they return home before they pass on or one of the specific individuals (mentioned previously) lives on the property.

How Working With an Attorney Can Help

Lien rules and Arizona Medicaid recovery will always vary depending on the specific individuals and assets involved. In some cases, you may be able to use an asset protection trust to prevent the state from attempting reimbursement. It’s important that you do this under a professional’s supervision to ensure that it’s legally valid.

Working with an attorney can not only improve your odds of Medicaid approval in Arizona, but they may be able to help you with your financial questions on the matter. The law is always changing, so working with someone who knows the current rules is invaluable for securing your future.

Frequently Asked Questions on Estate Recovery

Here are some commonly asked questions regarding the estate recovery process: 

Q: Will my spouse be required to repay my Medicaid costs?

While your spouse is still alive, ALTCS can’t require them to repay your benefits. However, once they pass on, the state may attempt to recover nursing home care costs by filing a claim against your estate. 

Q: Can Medicaid take my home before I die? 

There aren’t any circumstances in which the state can take your home before death, but they can place a lien on it. This might happen if the Medicaid recipient covers part of their healthcare costs as one of the conditions of their benefits and can’t reasonably expect to return home after treatment.

Q: What should I do if I believe the state made a mistake?

Keep in mind that the state must tell you before they can place a lien on your home or take your property. You can request a hearing if you think the state made a mistake. A lawyer can help you organize your case and work with you to secure the best possible outcome. 

What to Do if You Need Help in Arizona

The information provided here is general, while specific situations can be more complicated. For this reason, it’s always wise to get advice from an experienced estate planning attorney when you have any questions about estate recovery. Speak with one of our professionals today and get the answers to your questions.
 

Call Arizona Estate Attorney Dave Weed at (480)467-4325 to discuss your case today.

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