Monday, May 09, 2011

Following is language from the June 2011 proposed changes to the BEM 400 regarding “preliminary estate recovery” provisions. Note, it clarifies that recovery only applies to probate assets. It appears to seek recovery from any Medicaid beneficiary over the age of 55 (meaning broader than just long term care), and provides for yet to be elaborated upon undue hardship exceptions.

Clearly, the State of Michigan needs to clarify its terms. For example, the proposed regulation states:

"The state may decide not to recover money if it creates an ‘Undue Hardship’ or if any of the following people lawfully live in the beneficiary's home".

The term "may" implies discretion. That is never helpful! Also, the statement "lawfully live in the home"… what does this mean? Owner, tenant, guest, non-trespasser?

The statement "A survivor who (1) lives in the home for two years….” What do they mean by survivor? Is this a joint owner in the property, an heir, the person who is to inherit, or anyone else?

Finally, the statement "An undue hardship exists when: ... The estate is a home of modest value;" What is modest value?

With all of the above questions, here is the proposed language set for approval in June, 2011:

The federal government requires Medicaid to recover money that it paid for services from the estates of Medicaid beneficiaries who have died. Medicaid will only recover the amount Medicaid paid for a beneficiary. This is estate recovery. The state will not seek recovery of certain Medicare cost-sharing benefits.

What is an estate?

An estate includes all property and assets that pass through probate court. Example: homes, cars, insurance money and bank accounts.

Who is subject to estate recovery?

Medicaid beneficiaries who are age 55 or older.

Are there exceptions to estate recovery?

The state may decide not to recover money if it creates an “Undue Hardship” or if any of the following people lawfully live in the beneficiary’s home

  • Beneficiary’s spouse.
  • Beneficiary’s child who is under the age of 21, blind, or permanently disabled.
  • Beneficiary’s sibling who has an equity interest in the home and was living in the home for at least 1 year immediately before the beneficiary’s death.
  • 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:

  • The estate is the sole source of income for the survivors, such as a family farm or business; or
  • The estate is a home of modest value; or
  • A survivor would become or remain eligible for Medicaid if recovery occurred.
  • How does estate recovery work?
  • When a Medicaid beneficiary age 55 or older dies, the state sends an estate recovery notice to the estate representative or heirs. The estate recovery notice tells them:
    • the state plans to file a claim;
    • how much the state will claim;
    • how to apply for an undue hardship waiver.

If no exceptions apply, then the state will file a claim with the estate.

How to apply for an undue hardship waiver?

An Undue Hardship application must be completed. Applications are available from the following sources:

  • online at
  • by email at

The completed application must be received no later than 60 days from the date of the estate recovery notice. Send copies of any documents the notice specified. The state will determine if a waiver is warranted.

As always, feel free to contact me if you've got any questions. I'm always happy to help.