“Estate recovery” is the term that refers to the right of a state to reach the assets of Medicaid recipients who have died in order to reimburse the state for certain Medicaid payments. Federal law requires each state to have a federally approved, estate recovery program. As long as the program fits within a broad range of prescribed parameters, the details of each state’s program are left to the state to decide. Michigan’s estate recovery program was enacted on September 30, 2007, and it received federal approval in May, 2011. The program was made retroactive to July 1, 2010, meaning that reimbursement may be sought from the estates of individuals who received covered Medicaid services on or after July 1, 2010.

Michigan’s estate recovery program is administered by the Michigan Department of Community Health, which, in turn, has retained Health Management Systems, Inc. (HMS), a debt collection company, to pursue reimbursement on behalf of the state. HMS is paid based upon a percentage of funds collected.

Michigan’s estate recovery program includes the following key points:

• It applies to persons 55 and older for covered services rendered after the person attained the age 55;
• It covers most, but not all, Medicaid services. Covered services include such things as nursing home care, home health and community based services, hospital and prescription services;
• Recovery is limited to “probate assets” of the Medicaid recipient. “Probate assets” are generally assets titled in the sole and individual name of the person who has died. If there are no probate assets and no probate estate, there can be no recovery;
• Estate recovery claims cannot be collected from the recipient’s revocable living trust;
• Recovery efforts can only begin after the death of the Medicaid recipient’s surviving spouse;
• Recovery is limited to amounts actually paid by the state; and
• Hardship waivers are available if conditions are met.

Estate recovery efforts begin with a Notice Of Intent To File a Claim Against Estate, sent by HMS to the family of the deceased Medicaid recipient. The notice includes an Estate Recovery Questionnaire, which must be completed and returned. While the Notice and Questionnaire cannot be ignored, some of the representations made in the notice, and information demanded in response to the questionnaire, appear to have no basis in law.

If you have received such a notice from HMS and are unsure how you should respond, we can help. Better yet, the time to deal with potential estate recovery issues is before death, through comprehensive estate planning. We can help there too. For more information on estate recovery, visit the Michigan Department of Community Health website at: http://www.michigan.gov/mdch/0,1607,7-132-2943_4860_56113_58553—,00.html