New York's Medicaid Estate Recovery Program

Medicaid provides essential health care coverage for individuals and families with limited incomes. This joint federal and state program often covers long-term care services like nursing home care or home-based support. But many people don't realize the financial impact that receiving Medicaid can have on their heirs after they pass away.

Under federal law, states like New York must have a Medicaid Estate Recovery Program to recoup certain long-term care costs from the estate of Medicaid recipients after they die. The law also allows the states to choose to recover the costs of other Medicaid-covered services provided to Medicaid recipients who are 55 and older or permanently institutionalized. (42 U.S.C. § 1396p(b).)

Each state operates its own Medicaid Estate Recovery Program (MERP), with varying rules about what Medicaid costs can be recovered and which estate assets are included. Knowing how New York's program works can help you plan ahead and better prepare your family for the future.

Who Runs New York's Medicaid Estate Recovery Program?

The state Office of the Medicaid Inspector General (OMIG) operates New York's Medicaid Estate Recovery Program. OMIG contracts with a vendor, Health Management Systems (HMS), to perform some estate recovery tasks, such as researching the assets owned by Medicaid recipients and contacting the heirs or representatives of your estate.

Which Medicaid Costs Will New York Try to Recover From My Estate?

New York is one of the states that tries to recover the maximum amount of Medicaid benefits allowed by federal law. That means, after your death, the state will try to recoup all the Medicaid benefits you received after turning 55 or becoming permanently institutionalized (whichever happened first), not just the expenses for long-term care in a nursing home.

OMIG will seek repayment from your estate for any medical assistance provided to you for:

• hospital services
• physician services
• prescription drugs
• home and community-based services
• nursing homes or skilled nursing facilities
• premiums paid for the Medicaid Managed Care enrollment, and
• certain other payments made by the Medicaid program.

What Property Is Subject to Estate Recovery in New York?

Federal estate recovery law allows states to recover medical assistance payments from any assets in which the Medicaid recipient had any legal title or interest at the time of death. (42 U.S.C. § 1396p(b)(4).) That means everything you own when you die could be subject to Medicaid estate recovery.

Since 2011, New York has used this law to define your "estate" to include both your probate estate and assets that bypass probate, such as:

• joint accounts
• transfer-on-death deeds and accounts, and
• property passed to an heir through:
• joint tenancy
• tenancy in common
• survivorship
• living trusts, or
• other arrangements.

So in New York, keeping your estate assets from going through probate doesn't protect them from Medicaid estate recovery. (N.Y. Soc. Serv. Law §369(6).)

New York can also recover Medicaid funds from insurance policies that name the deceased person's estate as beneficiary or that have no named beneficiary. (N.Y. Soc. Serv. Law § 105.)

Are Any Estates Exempt From Medicaid Estate Recovery in New York?

The state of New York will delay Medicaid estate recovery under specific circumstances. Federal and state laws prohibit Medicaid estate recovery in New York if you have:

• a surviving spouse
• a minor child (under 21), or
• an adult child who is blind or qualifies as disabled under (42 U.S.C. 1382c).

The state will begin the recovery process once the situation changes—for instance, after your spouse dies or your minor child turns 21.

This delay applies to all recovery, including all assets that pass directly to an heir after your death, even if that heir isn't your surviving spouse or minor, blind, or disabled child.

What If My Estate Isn't Worth Enough to Cover the Medicaid I Received?

New York's Medicaid Estate Recovery Program won't try to recover more than your estate is worth. So, the state will never ask your family to pay back Medicaid spending from their own pockets.

Can My Family Avoid Estate Recovery If It Would Cause a Hardship?

New York Social Services won't try to recover your estate if it would cause an undue hardship for your heirs. (N.Y. Soc. Serv. Law § 369(5).) What qualifies as an undue hardship is based on criteria established by the federal Department of Health and Human Services (HHS).

The New York State Department of Health (DOH) offers a couple of situations can qualify for an undue hardship waiver, including when the asset that the state would like to take is:

• your heir's sole income-producing asset—like a family farm or family business—and it produces limited income, or
• a home or other real property of modest value (valued at no more than 50% of the average selling price in the county on your death date), and the home is the primary residence of the beneficiary. (N.Y. State Dep't of Health, 11 OHIP/ADM-8.)

The state can find estate recovery would cause an undue hardship in other situations too. But hardships created by your estate planning, or your heir being unable to maintain a pre-existing lifestyle doesn't qualify as undue hardships.

Does New York Have Any Other Exemptions from Medicaid Estate Recovery?

New York Social Services won't try to recover assets from your estate if it isn't cost-effective for the state to do so. Cost-effectiveness is based on a variety of factors, including:

• the administrative cost
• the amount of Medicaid paid, and
• the availability of assets from which to recover.

The state also can't pursue estate recovery of certain income, resources, or property of Native Americans or Alaska Natives. (42 U.S.C. § 1396p(b)(3)(B).) Estate assets that include reparation payments are also off-limits.

Finally, New York won't place a Medicaid recovery lien on your home if you have long-term care insurance certified under the New York State Partnership for Long-Term Care that pays for the first 36 months of your nursing home care.

Will New York Medicaid Place a Lien on My Home?

The state of New York won't place a medical assistance (MA) lien on your home while you or your spouse are alive. The state also won't place such a lien on your home if your child is still a minor, blind, or disabled.

If you aren't married and have no minor, blind, or disabled children, the state can place an MA lien on your home if you move into a residential care facility (nursing home or other medical facility) and you can't reasonably be expected to return home. But any such lien would dissolve if you're ever discharged and move back into your home. (18 N.Y.C.R.R. § 360-7.11(a).)

New York Medicaid also won't try to recover your home with an MA lien if one of the following is true:

• your sibling lives in the home and:
• has a ownership interest in the home
• lived in the home for at least one year immediately before you moved into a nursing home, and
• has lived in the home continuously since that time, or
• your adult child lives in the home and:
• lived in the home for at least two years immediately before you went into a nursing home
• provided care that delayed your move to a nursing home, and
• has lived in the home continuously since you moved into a nursing home. (18 N.Y.C.R.R. § 360-7.11(b)(3).)

But should the situation change—your surviving spouse dies, your minor child turns 21, or your sibling or adult child moves out of the house—the state will file a medical assistance lien on your home to recover Medicaid costs.

Where Can I Get More Information About New York Medicaid Estate Recovery?

If you have questions about New York's MERP, contact OMIG's Casualty & Estate Recovery Unit:

• by sending an email to [email protected]
• by calling 518-474-6852, or
• by sending mail to NYS Office of the Medicaid Inspector General, Attention: OMIG Casualty & Estate Recovery Unit, 800 North Pearl St., Albany, NY 12204.

Learn more about the federal and state laws that govern Medicaid estate recovery in New York online on the OMIG website.