What is Estate Recovery?

Medicaid is a State and Federally funded program that pays for healthcare if you have limited income.  The Federal government requires state Medicaid programs to seek recovery from the estates of certain deceased beneficiaries who have received benefits from a state Medicaid program.

Under the Estate Recovery program, the Michigan Department of Health and Human Services (MDHHS) will seek repayment of benefits received from Medicaid.  Under some circumstances, the state may choose not to seek or may defer recovery from your estate.  

 

Who is Subject to Estate Recovery? 

Estate Recovery only applies to Medicaid beneficiaries who: 

- are 55 years of age or older; and
 

- have received long-term care services anytime on or after September 30, 2007. 

 

What is an Estate? 

An estate includes all property and other assets that pass from a deceased beneficiary to his/her heirs through a probate proceeding. If you have received an asset disregard due to a long-term care partnership policy, Estate Recovery applies to all assets whether they are subject to probate administration or not. Estate is defined in  MCL  § 400.112h . 

 

Can I Transfer My Assets to Avoid Estate Recovery? 

Your eligibility may be affected if you transfer assets to avoid estate recovery.  Before you transfer any assets, you should speak with a legal advisor so that you fully understand the consequences of transferring assets in an attempt to avoid estate recovery.  

You should be aware that the law presumes that no undue hardship exists if the hardship resulted from transferring assets to avoid estate recovery.  MCL § 400.112g(3)(e)(iii).

 

How Does Estate Recovery Work? 

When MDHHS learns of a Medicaid beneficiary's death, a notice and other information will be sent to the estate representative or heirs. This notice will state that MDHHS intends to file a claim. A questionnaire will be sent with the notice. This questionnaire must be filled out and returned within 2 weeks. It is important that MDHHS receives this questionnaire in order to determine if any exemptions may apply. You may obtain a copy of the questionnaire here.

Once the questionnaire is returned, an undue hardship application may be requested.

 

Statutory Exemptions to Estate Recovery 

MDHHS will defer recovery if any of the following individuals is living:

1.  A Medicaid beneficiary's spouse. 

2.  A Medicaid beneficiary's child who is less than 21 years old. 

3.  A Medicaid beneficiary's child who is blind or permanently disabled. 

Also, MDHHS will defer recovery while one of the following is living in the home:

1. A survivor who lived in the home and provided care that allowed the Medicaid recipient to remain in their home for at least two years immediately prior to the Medicaid recipient's admission into a medical facility. 

2.  A Medicaid beneficiary's sibling who has an equity interest in the home and who lived in the home for at least one year immediately prior to the Medicaid beneficiary's admission into a medical facility.  

Certain Medicare cost sharing benefits are exempt from Estate Recovery.  

The above exemptions are temporary. Additionally, MDHHS will temporarily defer Estate Recovery if it would result in an undue hardship.

 

What is an Undue Hardship? 

An undue hardship may exist when (1) the estate subject to recovery is the primary income-producing asset of the survivors (where such income is limited), such as a family farm or business; (2) the estate subject to recovery is a home of modest value.

To qualify for an undue hardship waiver, the applicant must satisfy a Means Test. This ensures that an actual hardship would result. An applicant will satisfy the means test if both of the following are true:

  • Total household income of the applicant is less than 200% of the poverty level for a household of the same size: and
  • Total household resources of the applicant are less than $10,000.

As stated above, there is a presumption that no hardship exists if the hardship resulted from estate planning methods where assets were diverted in order to avoid estate recovery.

"Home of modest value" means a home that is worth less than 50% of the average price of a home in the county where it is located on the date the Medicaid recipient died.  The average price of a home may be determined from the tax assessment values in the county. You may obtain an Undue Hardship Waiver Application here, or by calling 1-844-TPL-MDCH (844-875-6324).

 

How Do I Appeal an Agency Decision Regarding an Undue Hardship? 

If you would like to appeal an agency decision denying an undue hardship waiver, you must request a hearing through the Michigan Administrative Hearing System. This can be done by completing the form below and mailing to:

Michigan Administrative Hearing System for the Department of Health and Human Services
PO Box 30736
Lansing, MI 48909 

 

DCH-0092-Request for Hearing


 

How Do I Make a Voluntary Payment? 

To make a voluntary payment, you may send a check made out to the State of Michigan to:

State of Michigan 
P.O. Box 30053 
Lansing, MI 48909

 

Additional Information: 

Estate Recovery Brochure 

Estate Recovery FAQ's 

Links to Estate Recovery Laws: 

State of Michigan Estate Recovery 

Federal Estate Recovery 

 

Contact Information: 

Toll-Free Number: 1-844-TPL-MDCH (844-875-6324)

Fax: 517-346-9806

Email: MDHHS-EstateRecovery@michigan.gov

Mailing address: PO Box 30435, Lansing, MI 48909