State to pursue liens on estates for Medicaid
Seattle Times staff reporter
For the first time, Washington state officials will pursue liens against Medicaid patients' estates to recover the cost of their long-term care — even if they have deeded their homes to relatives or others.
The new law, which applies to all such property transfers made after June 30, closes a long-standing loophole that some Medicaid patients have used to keep their family homes out of the state's reach.
The law also clears the way for the state to file liens on property while patients are still in a nursing home or the hospital — and are unlikely ever to be discharged — instead of waiting until after they die.
The changes affect a small number of people: those who are 55 and over, poor enough to qualify for Medicaid, but who own a home, which is not factored into a person's eligibility for Medicaid. But the changes could pose dilemmas for homeowners who expect to seek Medicaid coverage someday for long-term care.
That's because property held under "joint tenancy" or as "life estates" will no longer be exempt from estate recovery. Such arrangements allow seniors to live in their homes and retain exclusive rights but then give the property to another person after death. For instance, a joint tenancy allows a spouse or a caretaker to inherit a home, while a life estate could be used to give a parent's home to a child.
Under the old rules, people could put their homes under joint tenancy or into life-estate arrangements to protect them from liens for Medicaid repayment.
Now the only way for seniors to protect their property from Medicaid repayment is to give up ownership outright at least three years before receiving coverage.
But that means the heir gains full control of the property, so the heir could force the Medicaid patient out of the house or sell the property, said Peter Greenfield, an attorney with Columbia Legal Services, a Seattle nonprofit group that provides legal assistance to low-income people. The heir's creditors also could go after the house.
To qualify for Medicaid, applicants must have no more than $2,000 in cash or other assets, besides a home and a car, generally. Seniors can legally give away property or other possessions to reduce their assets at least three years before going on Medicaid.
Medicaid spending for long-term care is rising. States use estate recovery to offset some of that cost. Washington collects for the cost of Medicaid services in nursing homes, assisted-living facilities, hospitals and homes for people 55 and older. The state does not take action as long as a spouse or a dependent or disabled child is living in the home.
Don Mercer, chief of the Office of Financial Recovery, which collects debts owed to the state Department of Social & Health Services, said his office sponsored the new law to boost the odds of recouping Medicaid spending.
Because the state is essentially an unsecured creditor, placing a lien while the patient is still alive ensures that the state is first in line to get paid when the estate is settled.
The state now will be allowed to place a lien as soon as a doctor certifies that a patient is unlikely to return home. The liens are canceled if a patient recovers.
The Office of Financial Recovery recoups an average of $90,000 from each estate, collecting about $13 million a year.
But that's a fraction of the $1 billion that Washington spends annually for long-term care for Medicaid patients, including 12,500 people in nursing homes.
"If there are no assets for us to go after, it's written off," Mercer said.
Kyung Song: 206-464-2423 or firstname.lastname@example.org
Copyright © 2005 The Seattle Times Company