Many people are vaguely aware that Medicaid (not to be confused with Medicare) can collect from a decedent's estate for amounts paid for the decedent's care during lifetime. What they do not know is that state laws on this vary widely. This is because Medicaid is a federal-state partnership program, and the federal laws governing the Medicaid program give states some latitude in designing their estate recovery programs.
Some states have elected "standard recovery" while others have elected "expanded recovery", in the parlance used by elder law attorneys.
In "standard recovery" states, Medicaid only pursues its claim only against a decedent's probate estate. This is done by imposing requirements that courts and/or attorneys notify Medicaid that a probate case has been opened, thus giving Medicaid the opportunity to submit its claim along with other creditors. In some states an affirmative clearance is required from Medicaid before the estate can be closed.
In "standard recovery" states it is fairly easy to avoid Medicaid recovery by ensuring that all assets pass at death outside of probate. Any experienced estate planning attorney can counsel you on this. The pure "standard recovery" states in this law firm's field of service are Alaska, Arizona, California, and Colorado.
In "expanded recovery" states, Medicaid pursues its claims against the decedent's probate estate AND against assets that pass outside of probate, such as assets in a living trust or property held in joint tenancy. Oregon is an expanded recovery state. That doesn't mean that an estate planning attorney can't help you avoid Medicaid recovery in Oregon; it just means you must plan way in advance (at least 5 years).
So, where does Tennessee fit? Well, Tennessee is a bit of an oddball. Technically, according to Tennessee's statutes and regulations, Tennessee is a "standard recovery" state. However, there are court cases in Tennessee that have essentially expanded the definition of "probate estate" to make Tennessee a semi-expanded recovery state. It's a bit complicated, so let's get started with some basics.
Like many other states (such as California), Tennessee has a 12-month statute of limitations for creditors of a decedent to make a their claims (Tenn Code Ann. 30-2-310(b)), but the Tennessee Supreme Court ruled in a case known as In re Estate of Turner, 295 S.W.3d 610 (Tenn. 2009) that this statute does not apply to TennCare. Why? Because there is another statute that provides that a probate can't be closed without a release from TennCare. Tenn Code Ann. 71-5-116(c)(2). In this blogger's opinion the case could have easily and justifiably been decided the other way, but it wasn't, and this is now the law. What this means is a decedent's heirs cannot intentionally wait more than 12 months after date of death to open a probate and thereby avoid TennCare's claim for reimbursement, if applicable. See also In re Estate of Gregory, 2012 Tenn. Ct. App. LEXIS 438, 2012 WL 2499502 (Tenn. Ct. App. June 29, 2012). But they can wait more than four years from date of death to open a probate case and thereby avoid Tenncare estate recovery if Tenncare does not itself open a probate case within four years of date of death.
In some "standard" recovery states, such as California, a TennCare recipient can completely avoid Medicaid (MediCal in California) estate recovery simply by putting all of his or her assets in a revocable living trust during his or her lifetime. Individuals that employ this strategy die owning nothing in their names (all assets being in a trust) and, therefore, no probate case is opened and, therefore, the Medicaid agency (MediCal in California) makes no claim for reimbursement. While it is well known that revocable living trusts do not provide protection from creditors in general, it is not as well known that it does (at least in California and other standard recovery states) provide protection from one particular creditor - Medicaid.
Not so in Tennessee. In Tennessee, TennCare can (and most likely will) petition the court to appoint an administrator of the estate (if nobody else does), and then proceed to assert its claim and at the same time ask the court to claw back into the probate estate the assets that were in the revocable living trust at the decedent's date of death, just like any other creditor could do, the only difference being the other creditors are subject to the 12-month statute of limitations while TennCare is not. In re Estate of Stidham, 438 S.W.3d 535 (Tenn. Ct. App. August 23, 2012). The bottom line is that in Tennessee, unlike other states, a revocable living trust does not shield the estate from TennCare recovery.
So how, then, does one avoid TennCare recovery in Tennessee assuming one is so inclined?
The number one and most reliable method is to PLAN AHEAD, way ahead. By "way ahead", we mean at least five years before you need nursing home care. Call us at 931-250-8585 and ask about "Medicaid pre-planning".
If you fail to plan ahead, TennCare CAN AND WILL seek reimbursement from the assets in your probate estate AND the assets in your revocable living trust upon your passing. At that time the ONLY hope your heirs will have of completely avoiding TennCare recovery is if the property subject to recovery is the sole income-producing asset of the survivors, such as a family farm or other family business. It is relatively rare for this exception to apply.
The following exceptions will DELAY TennCare recovery until the exception no longer applies, so they are usually only temporary:
- A brother or sister of the decedent meets all of the following criteria: (a) he or she was lawfully residing in the decedent's home for a period of one year immediately before the decedent's admission to the medical institution; and (b) he or she provided care to the decedent for that one year, which permitted the individual to reside at home rather than in an institution; and (c) he or she has lawfully resided in such home on a continuous basis since the date of the individual's admission to the medical institution. This results in deferral of recovery until the sibling no longer resides in the home.
- A child of the decedent meets all of the following criteria: (a) he or she was lawfully residing in the decedent's home for a period of two years immediately before the decedent's admission to a medical facility; and (b) he or she provided care to the decedent for those two years, which permitted the decedent to reside at home rather than in an institution; and (c) he or she has lawfully resided in such home on a continuous basis since the date of the individual's admission to the medical institution. The results in deferral of recovery until the child no longer resides in the home.
- The decedent is survived by a surviving spouse. This results in deferral of recovery until the surviving spouse passes.
- The decedent is survived by minor children (under age 18). This results in deferral of recovery until all children have attained age 18.
- The decedent is survived by a child of any age who is blind or permanently and totally disabled. This results in deferral of recovery until said child or children are deceased, usually, because it is uncommon for one to regain vision or ability (but it could happen).
Call us if you have concerns about future Medicaid recovery. We can help a lot if you plan ahead. We can often still help if you have waited until the last minute, but it will most likely be more expensive than planning ahead and the assets we can protect will be fewer.
Comments
Sean Mckeever Reply
Posted Jan 29, 2020 at 21:23:44
Keep sharing more informative content. I really appreciate your work and your services. We also provide you the best services for senior care. Thanks for sharing!
Nathan Braden Reply
Posted Feb 02, 2020 at 12:01:55
As I understand, at least here in CA., Medicaid also cannot come back after the home that you pass on to your heirs, if it is of “modest value”. That means its fair market value is 50 percent or less than that of the average home in that county. Being a “small estate”, its usually then free of going through probate also. Can someone confirm this?
Nina Whitehurst Reply
Posted Feb 03, 2020 at 06:01:53
That is true, but the best and surest way to avoid Medicaid recovery for the home in California is to place it in a revocable living trust.
Amy Smith Reply
Posted Jul 15, 2020 at 17:35:17
I have an attorney recommended that I allow my Mom to purchase a life estate in my home in order to spend down her assets. She has been living with me for years, and will continue to do so. I am worried my home could later be taken by TennCare. Should I be worried?
Nina Whitehurst Reply
Posted Jul 16, 2020 at 07:44:02
Your home will not be taken by TennCare, but you should consult with an attorney or CPA about the tax implications for you, and your mother should be worried about the life estate being drafted correctly to avoid being treated as a countable resource for purposed of TennCare eligiblity.
David Reply
Posted Aug 12, 2020 at 06:57:41
Does a 100% P&T disabled veteran adult child of a Tenncare Medicaid descendent have to have resided in the family home at time of death of dad in a nursing home to delay estate recovery?
Nina Whitehurst Reply
Posted Aug 12, 2020 at 07:21:46
A child of the decedent meets all of the following criteria: (a) he or she was lawfully residing in the decedent’s home for a period of two years immediately before the decedent’s admission to a medical facility; and (b) he or she provided care to the decedent for those two years, which permitted the decedent to reside at home rather than in an institution; and © he or she has lawfully resided in such home on a continuous basis since the date of the individual’s admission to the medical institution. The results in deferral of recovery until the child no longer resides in the home.
Sandra Tuder Reply
Posted Feb 27, 2021 at 13:06:41
My mother passed on 8-11-20 and Tn care paid on her nursing home bill. My sister and I have had to pay for funeral and cleaning up her house as it was a hoarders house. We would like to sell her home to recoup our expenses. The house built in 1937 might be worth 15 to 20,000. It has been in ill repair for over 20 years. It has been 200 days since my mom passed. My sister and I are the only living children. She did have a will leaving it to us.
Nina Whitehurst Reply
Posted Mar 25, 2021 at 07:46:19
Sandra, I cannot give personalized legal advice over the internet. Please call our office to schedule a personal consultation.
Terri Miller Reply
Posted Jun 22, 2021 at 09:53:19
My dad is 88 years old and lives in tennessee. If my brother and I go on my dad’s deed as joint tendency with full rights of survivorship will my dad be penalized if he goes into a nursing home and applies for Medicaid? He will be paying for the first 5 years out of pocket. Then applying for assistance. Also will this form of deed help with Medicaid or TennCare estate recovery after his passing.
Nina Whitehurst Reply
Posted Mar 06, 2022 at 09:20:16
If/when you open a probate case to administer your mother’s estate (with or without a will), Tenncare must be paid or a release must be obtained. You might be able to obtain a deferral of estate recovery based upon your disabled status as to assets that are to be inherited by you.
If you do not open a probate yourself, Tenncare has 4 years from your mother’s date of death to open a probate case itself and seek estate recovery for amounts paid on her behalf for certain services. If/when they do that, you would again need to seek deferral for assets that are left to you.
Jeff Garrett Reply
Posted Mar 17, 2022 at 12:30:21
When my grandmother went to the nursing home I started living in her home because me and my fiance were homeless at the time I use to get payed by the VA to sit with here every day before she went to the nursing home but now she’s passed away and tenncare has sent me a letter say we have to move out so they can sell the house to get 16,000 dollars what can I do to get more time and can I just pay them instead of them selling the house
Nina Whitehurst Reply
Posted Mar 18, 2022 at 04:00:02
Yes, you can just pay Tenncare and that will make the lien go away. The faster you do that the better, before more costs start piling on.
But you should consult with an attorney before you do that. It would be a shame if you paid Tenncare and then lost the house anyway because you are not the legal heir. More facts are needed to determine that and, in any event, there is a process that must be followed before anybody can sell the house, unrelated to Tenncare.
Craig Hargis Reply
Posted Apr 01, 2022 at 13:41:52
My parents and myself are on the deed as joint tenants with rights of survivorship. The deed was created in 2017 so the five year look back period will be over.
I know this will avoid probate and by doing that since this is “technically” a standard recovery state will it protect from Tenncare recovery?
I know the case about the revocable trust but from what I’ve read about them they really just good to avoid probate also and don’t offer much on asset protection.
Nina Whitehurst Reply
Posted Apr 03, 2022 at 02:16:36
Yes, revocable living trusts do not provide asset protection during life nor do they avoid Tenncare estate recovery. They are great for probate avoidance and other things, but for asset protection I usually recommend an irrevocable trust. I cannot answer your question about whether your joint tenancy with right of survivorship deed will avoid Tenncare estate recovery. In most cases it will, but more information is needed to determine if any exceptions apply.
Jerrod Reply
Posted Apr 12, 2023 at 23:23:50
I have been taking care of my mom for almost two years she has been on hospice for 1 yr she has a house that was passed down to her from my grandfather an she has a will leaving it to me I have been living here for 4 yrs I have been her caregiver for almost 2 yrs is tenncare gonna take everything
Nina Whitehurst Reply
Posted Apr 13, 2023 at 03:42:35
Hospice is Medicare, not Medicaid. If all she has ever received is hospice then TennCare will not have a claim.
John Reply
Posted Jul 22, 2023 at 02:00:36
My mother purchased a mobile home with land in October with her special needs trust it was put in her name and mine as soul survivor she passed in the following January. I now live in the home. I’m her youngest son. I lived with her my entire life. She was on medicare and Medicaid. Also was on choices. She has been in nursing homes in and out for treatment. Can they take the home since I’m soul survivor. And disabled myself
Nina Whitehurst Reply
Posted Jul 23, 2023 at 06:24:20
John, click on this link, download the form, fill it out, sign it and mail it to Tenncare with a death certificate and your SSA disability determination letter: https://www.tn.gov/content/dam/tn/tenncare/documents/releaseform.pdf
Leave a Comment