Effective the first of August 2004, Georgia is now poised to carry out Estate Recovery of Medicaid outlays. This news affects many thousands of persons in Georgia who currently receive Medicaid assistance for skilled nursing home care expenses. Additionally, it has planning and practical consequences for many Georgia residents who anticipate the need for Medicaid assistance to help cover these expenses at some point in the future.

The Georgia Department of Community Health (“DCH”) adopted final rules for a Georgia Estate Recovery Program (“GERP”) in mid-July. Those rules are now effective, but the actual implementation of the rules is likely months away. The GERP will recover costs paid by Medicaid on behalf of qualifying Medicaid beneficiaries (“Beneficiaries”) of that government program by seeking recovery from the value of their estate assets after death. Only Medicaid Beneficiaries who die on or after August 1, 2004, and who receive notice of the GERP will be affected.

APPLICATION. The GERP will apply to Medicaid Beneficiaries:
1. Who were age 55 or older at the time of death, for whom a Georgia plan paid for the costs of medical care, and who were inpatients of:
a skilled nursing facility;
an intermediate care facility for the mentally retarded; or
another mental institution; or
who received medical assistance for medical services, to the extent those services consisted of:
skilled nursing facility services;
personal care services;
home and community based services; or
hospital and prescription drug services provided to individuals in nursing facilities or receiving home and community based services; or

2. Who, at any age, were inpatients in a nursing facility, intermediate care facility for the mentally retarded, or other mental institution if the individual was required, as a condition of receiving services in the facility under the Georgia plan, to spend for costs of medical care all but a minimal amount of their assets.

The latter instance is the classic Medicaid situation where one is required to “spend down” their own assets to qualify for Medicaid benefits.

EXCEPTIONS. Estates valued at $25,000 or less are exempt from the GERP. DCH also will not recover costs during periods in which certain "exception conditions" exist. These “exception conditions” include situations where the Beneficiary is survived by:

1. A spouse;

2. A child under age 21; or

3. A child who is blind or
permanently disabled pursuant to the eligibility requirements of Title XIX of the Social Security Act.
DCH may postpone recovery until all “exception conditions” are no longer present. An estate does not have to be open in order for DCH to execute its claim after all “exception conditions” are no longer present. Termination of recovery will occur when all real and personal property included as part of the Beneficiary’s estate is "no longer accessible."

LOOK-BACK PERIOD. The GERP rules apply to debts to the state resulting from the payment of Medicaid benefits on or after August 1, 2001. However, only current Medicaid Beneficiaries who pass away on or after August 1, 2004, and who receive notice of the GERP will be affected.

NOTICE REQUIRED TO BE GIVEN TO DCH. If a Medicaid debt is due, the Administrator of the nursing facility and the Personal Representative (Executor or Administrator) of the Beneficiary’s estate must notify the DCH within thirty (30) days of the death. This notice is in addition to the notice required by the Beneficiary's “Responsible Party” on record at the nursing facility.

After receipt of notice of a Beneficiary's death, the DCH will file a claim against the estate (if the estate is administered through Probate Court) for the full value of the Medicaid benefits paid on behalf of the Beneficiary.

NOTICE REQUIRED TO BE GIVEN BY DCH. Once notified of a Beneficiary's death, the DCH must provide a letter to the Personal Representative and any known heirs of the decedent to explain the terms and conditions of the GERP. The DCH must state its intent to recover the value of Medicaid benefits from the Beneficiary's estate and provide the amount sought. The DCH must also explain that recovery may include filing a lien against real property and that the heirs of the decedent may file an undue hardship waiver.

Finally, the letter must advise the heirs of their right to a hearing and must include a statement that the amount of the state’s claim may increase if there are additional Medicaid claims that have not yet been processed.

PERSONAL LIABILITY. The Personal Representative must notify the DCH of the Beneficiary's death before dispersing assets of the estate. A Personal Representative is personally liable for any incorrectly applied assets if the DCH is not informed of the Beneficiary's death and assets are distributed to heirs, beneficiaries or creditors of the decedent.

HARDSHIP WAIVER. In very limited circumstances, a hardship waiver may be requested within thirty (30) days from receipt of the notice from DCH. Generally, to succeed, the application must show that the State’s recovery of assets would result in the applicant becoming eligible for governmental public assistance based on need (e.g., Food Stamps, etc.) or medical assistance programs. Mere inconvenience for family members, restriction or lowering of the family's lifestyle, or an attempt to transfer assets to qualify under the hardship provision will not satisfy the requirements for a waiver. If a true hardship does exist, the State, in its discretion, may waive or defer recovery until the death of the eligible exempt heirs or dependents.

DCH’s PRIORITY. After the DCH files its statement of claim in the probate proceeding, its recovery claim has priority over all other claims except:

1. Years support for the family;

2. Funeral expenses (not to exceed $5,000, but $0 if the decedent prepaid funeral expenses that were included as a resource for Medicaid eligibility);

3. Necessary expenses of administration of the estate;

4. Reasonable expenses of the decedent's last illness; and

5. Unpaid taxes or other debts due to Georgia or the United States.
DCH may amend its claim as a matter of right at any time until the Beneficiary’s estate has been closed.

TIMING. The DCH may not take action against the Personal Representative to recover a debt due until the Personal Representative has qualified to serve and been serving for at least six months.

RECOVERY IF NO PROBATE. If a decedent held an account in a financial institution in the decedent's sole name, the Administrator of the GERP may request that the financial institution release and pay over the account assets to recover the cost of Medicaid benefits provided. However, the Administrator may do this only if no estate has been, and it is reasonable to assume that no estate will be, opened for the decedent, the decedent has no outstanding debts known by the Administrator of the GERP, and the financial institution determines that no valid objections to release proceeds have been received.

LIENS ON REAL PROPERTY. The state may impose a lien on a Beneficiary's real property after a Beneficiary is "permanently institutionalized." A presumption of permanence of institutionalization exists when a Beneficiary has been residing in a nursing facility or intermediate care facility for the mentally retarded and developmentally disabled for six consecutive months or more, there is no reasonable expectation that the Beneficiary will return home, and when none of the following persons are living in the home:

1. A spouse;

2. A child under age 21;

3. A child who is blind or permanently disabled pursuant to the eligibility requirements of the Social Security Act; or

4. A sibling with an equity interest in the home who has lived in the home for at least 1 year before the Beneficiary entered a nursing home.

NOTICE OF LIEN. The use of the State’s lien authority requires prior notification to the Beneficiary or his or her known heirs (and any Personal Representative). The notice must state the DCH’s determination that the Beneficiary is permanently institutionalized, that the Beneficiary is not reasonably expected to return home, and that the DCH intends to file a lien on the Beneficiary's real property. The lien cannot be filed until thirty-one (31) days after the date of the notice to the Beneficiary. A Beneficiary or his or her designee, within thirty (30) days after receipt of the notice, may request an administrative hearing. Prior to the Beneficiary's death, notice of the lien must be recorded in the Superior Court of the county in which the real property is located. Bottom line, the State can recover from the value of a Beneficiary's house or other real property even if there is not probate or estate administration, if the State properly imposes a lien on the property and records it in the county prior to the Beneficiary’s death.

POSTPONEMENT OF DCH ENFORCEMENT. The State may not enforce a lien on a home under the following circumstances:

1. The Beneficiary's spouse is alive, even if not living in the home;

2. The Beneficiary’s child under age 21 is alive, even if not living in the home;

3. The Beneficiary's blind or disabled child is alive, even if not living in the home;

4. An adult child of the Beneficiary is living in the home, that child had lived in the home for at least 2 years prior to the Beneficiary's admission to the nursing home, and the child had provided care that kept the Beneficiary from entering a nursing home sooner;

5. The Beneficiary's sibling is living in the home and he or she had lived in the home for at least 2 years prior to the Beneficiary's admission to a nursing home.
RELEASE OF DCH LIEN. DCH must release a lien within thirty (30) days if it receives notice that the Beneficiary is no longer permanently institutionalized and is now living in his or her home. Also, the DCH must release its lien at the closing if the real property is sold, but the DCH lien then attaches to the net proceeds of the sale. Finally, once a lien is imposed, it continues from the date of filing until it is satisfied, released or expires.

(Copyright © 2004, all rights reserved. Provided by Martin L. Pierce, a Member of the Chattanooga office of Husch & Eppenberger, LLC. Martin is a Business and Tax attorney who is Certified as an Estate Planning Specialist in Tennessee and through the American Bar Association-approved national professional and testing organization. He is also licensed in Georgia.
DISCLAIMER: This article provides general coverage of its subject area. It is provided free, with the understanding that the author, publisher and publication do not intend this article to be viewed as rendering legal advice or service. If legal advice is sought or required, the services of a competent professional should be sought. The author and the publisher shall not be responsible for any damages resulting from any error, inaccuracy or omission contained in this publication.)