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By Joseph A. Bollhofer, Esq. 

Update on New Law Expanding Medicaid’s Right to Recover Against Estates

            In last month’s article I explained the changes that became effective September 8, 2011 (not fully disclosed by the State Health Department until its Administrative Directive was issued on September 27, 2011), which dramatically expanded Medicaid’s right to be paid back from the estate of a deceased Medicaid recipient.

             Although many questions still exist as to exactly how enforcement will be attempted, we are starting to obtain a clearer understanding as to how Medicaid intends to interpret the nuances of the law and the regulations the Health Department recently created. For example, according to attorneys who met recently with Health Department officials, the value of a person’s right to occupy real estate that he previously transferred to an irrevocable trust will not be subject to recovery. However, the value of a “life estate” he kept in a deed will be subject to recovery. After his death, Medicaid will place a lien on the property, and ultimately seek to collect from that value. This appears to be another reason that transferring real estate to such a properly-worded trust rather than keeping a life estate in a deed is the smarter move.

              The new regulation is an “emergency regulation”, which expires on December 6, 2011 (yes, it’s good only for 90 days). Before then, it can be made permanent or extended for another 90 days. If nothing is done, it will cease to be effective. Then we’ll be in limbo, since the law itself was effective April 1, 2011, subject to the creation of the regulation. By the way, there are some significant differences in the language of the law and that of the regulation, but that is another story. There surely will be lawsuits. Typical New York politics. Stay tuned.

Copyright 2011 Joseph A. Bollhofer, Esq.

Editor’s Note:

Joseph A. Bollhofer, Esq., is an attorney who practices law in the areas of elder law, Medicaid, estate and business planning and administration, real estate and personal injury. He is a member of the National Academy of Elder Law Attorneys (NAELA) and of the Elder Law, Real Property, and Surrogate’s Court Committees of the Suffolk County Bar Association and  the Elder Law, Real Property Law and Torts, Insurance and Negligence Sections of the New York State Bar Association. He has been serving area residents since 1985 and is admitted to practice law in New York and New Jersey. His office is located at 291 Lake Ave., St. James, NY. (631-584-0100). For reprints of this article and others send a request to info@bollhoferlaw.com or visit www.bollhoferlaw.com.