ESTATE RECOVERY IS HERE: HOW DOES IT APPLY TO YOUR CLIENTS AND THEIR FAMILIES

P. Haans Mulder, JD, MST, CFP®

Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) 392-1821phmulder@holland-law.com

Coldwell Banker Woodland-Schmidt

Background• Attorney and Partner at Cunningham

Dalman, P.C.• Have a Masters in Tax (MST), CFP®

and specialize in estates/elder law and business planning.

Serving the Holland area since 1900

Background• Cunningham Dalman, P.C. has been serving

the lakeshore since 1900.• We have 15 attorneys specializing in all

areas of the law.

Serving the Holland area since 1900

Overview• Discuss the Medicaid rules and process.• Cover the what, who, when, where, and

how’s of Medicaid. • What is estate recovery and why is it

important to your clients and their families.

Serving the Holland area since 1900

Overview• What types of assets does estate

recovery apply to.• How it might impact your business.• How do your clients and their families

protect against it.

Serving the Holland area since 1900

What is Medicaid?• It is a state and federal program that

pays for medical treatment (including long term care).

• Oftentimes confused with Medicare.

 

Serving the Holland area since 1900

When does Medicaid apply?• Historically, it only paid for nursing

home care. • In certain counties (that have the MI

Choice Waiver program), it will pay for care in someone’s home or in an assisted living facility.

Serving the Holland area since 1900

Who does Medicaid apply to?

• Applies to people who are 65 years or older, blind, or disabled.

• Must satisfy the medical requirements (level of care assessment).

• Need to meet the income and asset tests.

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Who does Medicaid apply to?

• A patient’s monthly income cannot exceed the monthly cost of the nursing home ($6-7,000 in this area).

• For the Waiver program, a patient’s income (not a spouse) must be less than $2,022/month.

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Who does Medicaid apply to?

• The asset test requires that a single person cannot have more than $2,000 in countable assets.

• A patient can keep his or her home (as long as its not in a trust) as well as a vehicle.

Serving the Holland area since 1900

Who does Medicaid apply to?

• Asset test allows a married couple to keep their home (again, if it’s owned properly), a vehicle, and one-half of their other assets (up to a maximum of $109,560).

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What is estate recovery?• It is a process that the State of Michigan

gets reimbursed for the Medicaid services it has paid for.

• It does not put a lien (i.e. Medicaid lien) on exempt assets during a patient’s life or force a sale. 

Serving the Holland area since 1900

What is estate recovery?• It applies to people age 55 years or

older who have received Medicaid (i.e. long term care) services.

• Covers Medicaid services back to September 30, 2007.

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What assets does estate recovery apply to?

• It only applies to assets that have to be probated.

• That has the potential to include all assets (house, bank accounts, investments, vehicle, personal property, etc.).

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What assets does estate recovery apply to?

• But…the only assets that are typically left are: bank account, personal property (including vehicle), and a patient’s house.

• The house will be the most significant asset, but do not lose sight of the others.

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What effect might this have on your business?

• Estate recovery might incentivize patients to stay at home longer.

• Patients might be more likely to sell their house and have more liquid assets for their care.

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How do people protect against estate recovery?

• The most effective way to protect the house is with a “ladybird deed.”

• The house remains an exempt asset during the Medicaid recipient’s life.

• The costs and hassle of probate are avoided.

Serving the Holland area since 1900

How do people protect against estate recovery?

• What about other assets besides the house.

• The patient should make sure those assets avoid probate (i.e. having a trust named as owner, naming a beneficiary, etc.).

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Some other things to be concerned about

• When a single person is on Medicaid, he or she can keep the house.

• However, he or she will not be able to use Social Security and other income to pay the house expenses.

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Some other things to be concerned about

• This typically means that a child or beneficiary must pay these expenses.

• Children should protect their right to be reimbursed by executing and recording a mortgage against the house.

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Some other things to be concerned about

• This gives a child’s reimbursement claim higher priority than the State of Michigan’s estate recovery right.

• A child will get paid when the house sells.

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Some other things to be concerned about

• You should make sure the Medicaid recipient has signed a financial (also known as a general durable) power of attorney.

• That way, the agent can execute the mortgage.

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This is subject to change so you have to stay informed…

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Questions……

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Thank YouP. Haans Mulder, JD, MST, CFP®Cunningham Dalman, P.C.321 Settlers RoadHolland, MI 49423(616) 392-1821phmulder@holland-law.commary@holland-law.comwww.holland-law.com

Serving the Holland area since 1900