When an individual who is 55 years or older receives Medicaid payment for nursing facility services or home and community based long term care, his or her estate becomes subject to the estate recovery rules. Upon the death of that Medicaid recipient, Federal law requires Pennsylvania to seek to recover the amount of the Medicaid payments from the recipient’s probate estate.
Medicaid estate recovery is a federal mandate. Any state that wants to continue to receive federal contributions to its Medicaid program is required to implement an estate recovery program. While Pennsylvania runs our state program, most of the money collected is forwarded to the federal government.
During the administration of former Governor Rendell, the Department of Public Welfare sought to expand the scope of estate recovery well beyond that required by the federal mandate. The attempt was rejected due to strong objections voiced by an unusually broad coalition of groups that were concerned with the negative implications of the DPW proposal.
Now, Pennsylvania State Senator Kim Ward (R - Westmoreland) has introduced legislation that would ensure legislative oversight before any future DPW proposal to expand estate recovery could be implemented. Senator Ward is the well-respected Chair of the Senate Aging and Youth Committee and a member of the Senate Public Health and Welfare Committee, so her legislative proposal would appear to have a good chance to be enacted.
Here is a summary of Senator Ward’s proposal (SB 901). The summary was prepared by the Pennsylvania Association of Elder Law Attorneys (PAELA). PAELA was one of the professional organizations that opposed DPW’s previous expansion proposal. (Note that I am the current President of PAELA.)
Proposed Changes to Title 62 P.S. (Public Welfare Code)
Subsection 1412 (Repayment from probate estates)
Medicaid estate recovery is based on a federal law that requires Pennsylvania to try to recoup the costs of long term care services paid by Medicaid. Estate recovery was first implemented in Pennsylvania in 1994. For the past 17 years, Pennsylvania has wisely limited its scope to the dimensions mandated by federal law – collection from the probate estate of the recipient of Medicaid. Because the claim has been limited in this way, houses owned jointly by a husband and wife have not been subject to the estate recovery claim if the spouse in the nursing home died first.
In 2009, in a misguided attempt to collect additional revenues (most of which pass through to the federal government), former Governor Rendell’s budget proposed expanding estate recovery to reach property held as joint tenants or tenants by the entireties, life insurance, life estates, trusts, annuities and any “other assets in which the deceased individual had any legal title or interest at the time of death.” If passed, this proposal would have resulted in significant financial harm for the surviving spouses of nursing home residents. In addition, it would have created major titling and conveyancing problems for real and personal property, and would have negatively impacted the traditional use of life insurance by survivors
The Pennsylvania Association of Elder Law Attorneys (PAELA), along with a large coalition of groups including the PA Bankers’ Association, PA Land Title Association, Insurance Federation of Pennsylvania, AARP PA Chapter, PA Bar Association, Philadelphia Bar Association, and the PA Coalition of the Alzheimer’s Association strongly opposed the Governor’s proposal and worked hard to educate legislators about the unreasonable burden and devastating financial effects the proposal would have had on some of Pennsylvania’s most vulnerable citizens. Legislators heard the concerns of these groups and responded by eliminating this proposal from the final budget bill.
Proposed Legislative Change
The legislative process was essential in preventing the ill-conceived recovery expansion proposal from passing. But under current law, the Governor unilaterally and without legislative oversight can implement a proposal like this to expand estate recovery. A change this significant, with such potentially devastating effects, should not be permitted without the public debate and discussion that are part of the legislative process. Legislation has been introduced (Senate Bill 901) that would eliminate the Governor’s authority to expand estate recovery without legislative oversight. This result would be achieved by deleting the third sentence of Subsection 1412(a) as indicated below.
§1412. Repayment from probate estates. (a) Notwithstanding any other provision of this act or any other law, the department shall establish and implement an estate recovery program to recover medical assistance paid with respect to individuals who were fifty-five years of age or older at the time that assistance was received. Under this program, the department shall recover from the probate estate of an individual the amount of medical assistance paid for all nursing facility services, home- and community-based services and related hospital and prescription drug services. [DELETED:
With the approval of the Governor, the department may expand the estate recovery program by regulation to include medical assistance for services other than those listed in this section and to recover against other real and personal property in which an individual had any legal title or interest at the time of death.] The department's claim shall have the priority of a debt due the Commonwealth.
Summary provided by PAELA. www.paela.info. April 2011