Medicaid Expansion of Estate Recovery is Repealed

March 30th, 2012

We are extremely pleased to report that on March 27, 2012, Governor Cuomo and the State Legislature agreed upon the New York State Health Budget Bill for 2012-2013, which repeals the recent expanded definition of a Medicaid recipient’s “estate” and rejects the elimination of spousal refusal.  This is great news for elderly and disabled citizens of New York, and a true victory for those relying on Medicaid benefits for long-term care.

As many of you know, Medicaid has the right to seek reimbursement of its costs from the estate of a Medicaid recipient.  The Governor’s proposed Budget Bill and subsequent emergency regulations expanded the definition of the term estate to allow Medicaid to recover from assets outside of a decedent’s probate estate.  Had it not been repealed, this expanded definition would have included life estates, jointly held real or personal property, interests in trusts and retirement accounts such as IRA’s.  The proposed definition was in conflict with long established legal principles governing trusts, estates and real property.  Under the revised and final Bill, the definition of estate will be reinstated to include only assets in a decedent’s probate estate.

Additionally, the proposed Budget Bill included a provision that “spousal refusal” would be eliminated for married Medicaid recipients.  Effectively, this change would have forced community spouses to impoverish themselves by paying for the long-term care of their ill spouses.  Spousal refusal allows the spouse of a Medicaid applicant to sign a written statement refusing to make his or her own assets count as a resource of the spouse applying for Medicaid.  If a spousal refusal is signed, Medicaid must provide benefits to an applicant who is eligible, but retains the right to pursue a contribution from the community spouse later on.  Spousal refusal is an extremely important tool for married seniors, as it allows for healthy spouses to maintain themselves in their homes and communities, and plan for their own long-term care needs.  Fortunately, married couples continue to have the right to exercise spousal refusal.

If you would like to learn more about how the new Budget Bill will affect you and your family, please call us today.

Entry Filed under: Estate Gift Exemption,Estate Planning vs. Elder Law Planning,Medicaid Planning

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