North Carolina law authorizes the NC Division of Medical Assistance (DMA) to file a claim against the probate estate of a person who received Medicaid payments during his or her lifetime. Since most assets must be spent down in order to qualify for Medicaid, usually the only property owned by a Medicaid recipient at death would be his or her homeplace, or real property held jointly with another person.
Under the current law the state can only make a claim against property that is part of the decedent’s probate estate. That would include real estate (including the home) that is solely in the decedent’s name. It would also include co-ownership as a “tenant in common” without right of survivorship. However, life estates and real property that is owned as “joint tenants with right of survivorship” should not be considered part of the decedent’s estate and so would escape potential estate recovery. Congress has given states the authority to expand the definition of estate recovery to nonprobate property. North Carolina has not done so. (Note, however, that North Carolina does apply an expanded definition of the probate estate for purposes of an estate recovery of a Medicaid recipient who received the benefits of a long-term care partnership program policy.)
There are some exceptions to estate recovery. DMA will not pursue estate recovery if any of these situations applies:
- There is a surviving spouse;
- There is a surviving minor or disabled child;
- When hardship can be proven (under very limited circumstances); or
- The total assets of the estate are less than $5,000 or the total Medicaid payments subject to recovery is less than $3,000.
Despite contrary belief there is no “Medicaid” or “nursing home” lien in North Carolina. Following the death of a Medicaid recipient if there is no exception to estate recovery (see above), then the state is a fifth class creditor against the probate estate of the decedent. The state must take its turn after creditors of higher rank.
After the Medicaid recipient’s death, you can expect a letter from the DMA if your spouse or parent qualified for Medicaid still owning a home or other co-owned real estate. You should always get assistance from a qualified lawyer familiar with the Medicaid rules if you’re facing estate recovery.