We may be witnessing the beginning of a new chapter in the long and tortured history of estate recovery in Michigan. Recall that estate recovery allows the state to recover nursing home costs paid for by Medicaid from assets owned by the Medicaid recipient after their death. Typically, this will include the Medicaid recipient’s home. In our November 2008 Elder Law Today Newsletter, we discussed the latest news regarding Michigan’s estate recovery law. At that time, we explained that after years of speculation, Michigan was the last state in the country to finally enact its own estate recovery legislation on September 30, 2007. However, before the new law could be implemented, it first had to be approved by the federal government. After nearly 4 years of delay, it appears that estate recovery will finally be implemented. The Department of Human Services (DHS) recently released its proposed estate recovery rules which will take effect on July 1, 2011. The proposed rules fortunately appear to follow the estate recovery law that was passed in 2007, including maintaining several exceptions to avoid its impact. Here are the critical details regarding the proposed rules for Michigan’s estate recovery:
What is it?
The proposed rules define estate recovery as the recovery of money that Medicaid paid for services from the estates of Medicaid beneficiaries age 55 or older.
What assets are at risk?
Only assets that are part of an estate that passes through probate court following the owner’s death will be subject to estate recovery.
Are there any exceptions to estate recovery?
The state may not recover money if it creates an undue hardship or any of the following people lawfully live in the Medicaid beneficiaries home:
a. The beneficiary’s surviving spouse or child if the child is blind, disabled or under 21.
b. The beneficiary’s sibling who has an equity interest in the home and was living in the home for at least one year prior to the beneficiary’s death.
c. A survivor who was living in the beneficiary’s home for at least 2 years immediately before the beneficiary went into a medical facility and provided care so the beneficiary could stay at home during that period.
What is an undue hardship?
An undue hardship exists when:
a. The estate is the sole source of income for the survivors such as a family farm or business; or
b. The estate is a home of modest value; or
c. A survivor would become or remain eligible for Medicaid if recovery occurred.
For the past several years, we have been protecting our clients to avoid the potential impacts of estate recovery. Fortunately, because of the steps we have taken, our clients do not have to fear the State will be able to take their home. Many others however, are not so fortunate. Despite repeated warnings regarding estate recovery, they have not protected their estate. But thankfully, it is not too late to act. In order to determine the best solution for your specific situation, it is best to consult with an experienced elder law attorney.