Review: MA Lien Law and Estate Recovery Program

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1 Review: MA Lien Law and Estate Recovery Program Introduction MA Lien and Estate Recovery laws allow the State, through DHS, to attempt to recover correctly paid MA payments Done by placing liens on homes and by recovering assets from estates Initiated in 1991 and expanded in 2000 Number of provisions ensure DHS cannot enforce lien or estate claim during lifetime of MA recipient, his / her spouse, or minor or disabled child MA Lien Law What is a lien? A charge, hold or claim on a specific piece of real estate property. When property is sold, the lien is paid from proceeds of sale. - may be satisfied in whole or in part. In MA context, a lien is the amount of MA payments made on behalf of a person who is receiving care in a nursing home or hospital and not likely to return home.

2 MA Lien Law cont d Which MA payments can the lien include? - payments made by the State on behalf of a MA recipient after October 1, prior to April 1, 2000 the lien could only include MA payments made on behalf of a nursing home resident - since April 1, 2000 a lien placed on an MA nursing home recipient s home can include ALL MA benefits that are recoverable MA Lien Law cont d On what property may a Lien be placed? A lien may only be placed on a person s home -includes all lands connected to the property -cannot be placed on non-homestead property or on other non-real estate property including cars, boats, bank accounts, etc MA Lien Law cont d May the State obtain liens on all nursing home residents? NO. The state cannot place a lien on home property when: 1. Reasonable expectation that MA resident will return to the home, or 2. If any of the following live in the home: - spouse - child under age 21 - disabled child - sibling with ownership interest in the home and has lived there for one year before the MA recipient entered the nursing home

3 MA Lien Law cont d Limits on State collection of liens If lien in place, the State is not allowed to collect on the lien as long as the recipient has: - a living spouse - a child under age 21, or - an adult disabled child no matter where the spouse or child lives MA Lien Law cont d Limits on State collection on liens after MA recipient dies: Lien not enforceable if MA recipient is survived by a non- disabled adult child who: - lived with the parent for 2 years and - provided parent w/ care that delayed nursing home or hospital admission and - is still living in the parent s house MA Lien Law cont d How does the State get the lien? State files lien claim with the Register of Deeds office in the county where the home is located (NOT where the nursing home is located)

4 MA Lien Law cont d When does the state have to release the lien? If the recipient leaves the nursing home or hospital and returns home the state must file a release of lien with the Register of Deeds Lien appeal rights Can a lien be challenged? Yes - State must first notify recipient of lien and give right to challenge lien - Notice of Intent to File Lien - right to hearing on whether conditions have been met to place lien - 45 days to request hearing. Lien appeal rights cont d How to challenge a lien Must prove: - reasonable chance the MA recipient will return home OR - The property is not a home OR - The home is still occupied by spouse, minor child, disabled adult child or sibling w/ ownership interest who lived in home at least a year before recipient entered nursing home

5 Lien appeal rights cont d If Notice of Intent to File Lien is clear error, inform Estate Recovery program staff at (608) remember appeal deadline to preserve rights if informal resolution not successful. Request a hearing: send letter to Div. of Hearings and Appeals Lien appeal rights cont d Appealing ALJ hearing decision: - request a rehearing within 20 days from the date of ALJ decision or - appeal directly to circuit court within 30 days from date of ALJ decision Part II: Estate Recovery What is a claim against an estate? A notice to the estate administrator alleging the deceased owes money and a request that payment be made from the estate - notice comes from DHS and the amount claimed is the amount of MA payments paid on recipient s behalf

6 Estate Recovery cont d. Which MA payments may the estate claim include? Since October 1, 1991: All MA payments paid by the state for MA benefits received after October 1, 1991 by a person of any age while in a nursing home Since July 1, 1995: MA benefits paid on behalf of recipients age 55 and older for: - home health skilled nursing services, aide services, and therapy / speech pathology services - private duty nursing services - home and community based waiver services (COP/CIP) - inpatient hospital services provided during time period in which recipient was approved for HCBWS - prescription drugs provided during time the recipient approved to have HCB MA services Estate Recovery cont d. Which MA payments may the estate claim include? (cont d) Since January 1, 1996: - MA benefits provided under COP Classic for those benefits under Disease Aids program for people of all ages Since April 1, 2000: - MA personal care services for those age 55+ What is included in an estate? All property of a deceased person that passes by will through probate or by laws of intestacy if no will; includes: - real estate (land/ buildings) - personal property (cars, boats, bank accounts, etc)

7 What is included in an estate (cont d.)? Estate does not include property that does not pass by will through probate - state may not put a claim against most of this nonprobate property - Exception: as of July 1995, state may recover against accounts held in joint tenancy or as payable on death (POD) at time of death of MA recipient or surviving spouse Whose estate? For recovery of MA benefits, claim may only be filed against the estate of the deceased MA recipient. NOTE: for beneficiaries of COP and disease aids programs, state can recover from estate of surviving spouse upon that spouse s death Recovering the funds If deceased is survived by a spouse, child under 21, or adult disabled child, the court must deny the claim Recovery from estates that go through probate: - state has rights similar to other creditors, must comply with all probate procedures - evidence of amount of claim supplied through affidavit of DHS

8 From estate claim to lien If the deceased is survived by spouse or disabled or minor child, so that the estate claim must be denied, and if estate includes a home at recipient s death, the probate court can turn the estate claim into a lien when the home transfers to heir through probate -In this case, recipient of home receives it with a lien. If heir sells home, state may collect on lien; state must still follow rules re: lien enforcement Recovering from small estates When estate worth less than $50,000 an heir goes to probate court and files affidavit allowing the person to receive and disperse deceased person s remaining property rather than going through full probate process - State sends estate claim directly to person who completed affidavit and possesses the property Estate recovery when no heirs? If MA recipient dies and no petition for administration or settlement of the estate is filed within 20 days, the State may collect the decedent s remaining funds. State must present affidavit to custodian indicating all conditions have been met: 1. no surviving spouse, disabled child, or child under 21 years old; 2. decedent s remaining property is only cash; and 3. value of property doesn t exceed $50,000 or total amount of MA payments made on behalf of decedent after age 65 or admission to nursing home, whichever is less

9 Challenging estate recovery claim Various routes to take: - Informal resolution - contact estate recovery program at (608) This should work for obvious mistakes made by the State (ie. spouse or minor child still living) - Raise objections to claim during probate process - File application for undue hardship waiver Any beneficiary or heir of deceased MA recipient (or surviving spouse) may apply for undue hardship waiver Undue Hardship Waivers What is undue hardship? One of the following must apply: - waiver applicant is receiving General Relief, Relief to Needy Indian Persons, or Veteran s Benefits based on need or - waiver applicant would become or remain eligible for SSI, Food Stamps, AFDC, or MA if department pursued its claim or - decedent s real property is used as part of the waiver applicant s business, (includes working farm), and recovery would affect the property and result in the waiver applicant losing his means of livelihood Undue Hardship Waivers cont d How to apply for undue hardship waiver Mail written application for a waiver to DHS within 45 days after the date that DHS mailed its claim, affidavit, or notice whichever date is later - include in application: 1. relationship of applicant to decedent and documents proving the relationship 2. criteria which is basis for application, along with supporting documentation

10 Undue Hardship waivers cont d What if waiver is denied? Appeal Department s denial by serving the Department with a request for hearing within 45 days of date Department s decision was mailed. - submit appeal to Div. of Hearings and Appeals in writing explaining basis for appeal If this appeal denied, file for appeal to circuit court within 30 days of Department s decision.