Medicaid is a joint federal and state program that helps pay medical costs for people who can't afford them. It is particularly common for people to seek Medicaid benefits when they need long-term care services, whether due to age or disability.
It's a costly program, and federal law requires every state to have what's called a "Medicaid Estate Recovery Program." This means that, after your death, your survivors may have to reimburse Medicaid for certain services provided to you.
When you become eligible for Medicaid, the state of Alabama must send you information about the estate recovery program. Understanding the basics of the program and letting family members know what to expect will help avoid unpleasant surprises after your death.
Will Alabama seek reimbursement from my estate?
Which Medicaid services must my estate pay back?
What assets will Alabama go after for Medicaid recovery?
Can the state take my house during my life?
Could my estate be exempt from Alabama's Medicaid Estate Recovery Program?
Could my estate be excused from repaying because it would cause hardship for my family?
Who must make sure that the state is notified and any required repayment is made?
The assets you own at your death make up your "estate." Medicaid will seek reimbursement from your estate if any of the following was true:
Example 1: Ellen has been receiving Medicaid assistance since she was 40. When she dies at age 60, Medicaid will seek reimbursement for the benefits given Ellen from the day she turned 55 until her death.
Example 2: When Andrew becomes severely disabled at 52, his wife, Karen, moves him to a facility where he can get the long-term care he needs. He receives Medicaid assistance from the date of his disability. Andrew dies at age 60, and Karen at age 71. After Karen's death, Medicaid seeks reimbursement for all medical expenses it covered for Andrew.
Federal law requires Alabama to seek repayment for the cost of all long-term care services paid for by Medicaid, including related drug and hospital benefits. The state must also seek recovery for Medicare cost-sharing payments related to long-term care services.
The law allows each state to choose whether or not to seek reimbursement for other types of payments. Alabama seeks reimbursement for all Medicaid services, whether or not they are related to long-term care.
Under the Alabama Estate Recovery Program, assets subject to recovery may include homes, land, bank accounts, vehicles, cash, household goods, and other assets.
Repayment is made from the assets you owned at your death. If there isn't enough money to cover repayment, that's the end of it. Family members do not have to repay Medicaid from their own pockets.
No. But if you become permanently institutionalized, the state may place a lien on your house at the time your Medicaid benefits begin. (A lien is a legal claim against a piece of property that ensures a creditor -- in this case, Medicaid – eventually gets paid.) When your house is sold, either before or after your death, Medicaid will turn to the sale proceeds to collect what you owe.
The state can't place a lien on your house if close relatives live in it, including:
For more information about Medicaid liens, contact the Alabama Medicaid Agency using the information at the end of this article.
In Alabama, there is no complete exemption from Medicaid estate recovery. But the Alabama Medicaid Agency will delay seeking repayment if you are survived by:
Medicaid reimbursement can become complicated when delayed recovery is involved, especially if the children are very young or a disabled child is likely to live for a long time. If one of these situations applies to you and you have questions, contact the Alabama Medicaid Agency.
In Alabama, your estate may not owe anything to Medicaid if repayment would create "undue hardship" for your family. The Alabama Medicaid Recovery agency will allow a hardship exemption (called a waiver) if either of the following is true:
Medicaid must inform the person in charge of your estate that someone who inherits from you may apply for a hardship waiver under the conditions above. The inheritor then has 30 days to apply for a waiver. If the application is approved, that inheritor's portion of the repayment will be forgiven.
This job falls to the person in charge of wrapping up your estate, who must contact the Alabama Medicaid Agency within 30 days of your death. To make the process easier, you may want to give the person you expect to handle your final affairs a copy of the notice you receive from Medicaid when your benefits begin. (Remember, federal law requires Alabama to provide you with a notice explaining the estate recovery program.) It will help your representative understand how the program works. Otherwise, your representative can contact the Medicaid office using the information below.
After the Medicaid office receives notice of your death, it will contact the estate representative and explain how to proceed with the repayment process. (The Alabama Medicaid office says only that it will contact the representative "promptly.")
The person in charge of your estate should not distribute money or other assets from your estate until any required repayments to Medicaid have been made. A representative who later finds that there are not enough assets left to pay back Medicaid may be personally responsible for the bill.
For more information or to contact someone in Alabama's Medicaid Estate Recovery office, visit the website of the Alabama Medicaid Agency or call 855-543-8395.
The Alabama regulations related to Medicaid Estate Recovery are contained in Chapter 560-X-33 of the Alabama Medicaid Agency Administrative Code.