Selective Issues in Effective Medicaid Estate Recovery Statutes

Medicaid is a joint federal-state partnership program that provides medical care to the elderly, blind, and disabled poor. Unlike Medicare, Medicaid will pay for long-term care, leading millions of persons in need of such care to “spend-down” income or assets to qualify as sufficiently needy or poor. However, the state can eventually seek recovery of expenditures made through estate recovery programs following the death of both spouses. As it currently stands, states have no choice but to become increasingly vigilant in pursuing private funds in order to pay for Medicaid expenditures.

As a result, elderly citizens and their families will continue to face uncertainty over what will become of family assets demanded to pay for long-term care. This article examines what constitutes an “estate” for purposes of asset recovery to pay for long-term care expenditures. It also analyzes whether it is permissible for estate recovery programs to trace assets of a Medicaid recipient transferred during the recipient’s lifetime, thereby depriving the Medicaid recipient or the recipient’s spouse of an interest in the asset at the time of death. Finally, this article considers whether an annuity purchased to provide exempt income for a recipient’s spouse should be considered a resource sufficient to disqualify an applicant from Medicaid eligibility.

The article suggests that with an increase in the elderly population in need of long-term care and increased pressure on the entitlement programs that provide such care, it is crucial that Congress pass comprehensive legislation to make estate recovery programs conform across the states.