The term “estate recovery” refers to the federal law requirement that states attempt to recovery of payments made to healthcare providers on behalf of Medicaid recipients following the recipient’s death. Michigan first adopted its estate recovery law in 2007. It provides that the recipient’s estate may be subject to estate recovery only if the recipient’s estate is subject to probate proceedings. This has resulted in the increased use of life estate deeds by Medicaid recipients – a subject that has been previously addressed in prior Elder Law Today Newsletters.
Since 2007, there have been a series of court decisions addressing the interpretation of the estate recover statute. These cases have primarily focused on the proper notice necessary to assert a claim for estate recovery. In each case, the position of the state has been upheld. Most recently, the Michigan Court of Appeals released its opinion in the case of Estate of Wilma Ketchum v. Department of Health and Human Services. In Ketchum the court addressed the statutory exemption from estate recovery for a “home of modest value” – defined as a home valued at 50% or less than the average price of homes in the county. Although the parties agreed that the Wilma Ketchum’s home was of modest value, the court ruled in the favor of DHHS because the home had been subsequently sold as thus once converted to cash, was no longer a home of modest value.
It seems strange to suggest that a Medicaid recipient’s modestly valued home is subject to estate recovery only after it’s sold. Is a personal representative never supposed to sell the home? Perhaps the court will subsequently provide more clarity on this issue. In the meantime, the Ketchum case underscores the importance of a Medicaid recipient’s home avoiding probate upon the recipient’s death. With the courts adopting the state’s position thus far in these cases, the best solution is to avoid a fight with state entirely. See an experienced elder law attorney to make sure you loved one’s home is protected.