Medicaid Estate Recovery Applied to Late-Acquired Assets

JUNE 16, 1996 VOLUME 3, NUMBER 51

Bertha Cripe died in 1989 at the age of 84 in Indiana. At the time of her death, Ms. Cripe’s nursing home care was being paid for by Indiana’s Medicaid long term care program. Indiana’s Medicaid agency filed a claim against her estate in the amount of $90,313 for the last seven years of Medicaid subsidies.

Of course, Ms. Cripe had qualified for Medicaid assistance by showing that she had no assets, so ordinarily the claim for care would have been insignificant. A year before Ms. Cripe’s death, however, a wealthy cousin had died leaving Ms. Cripe a substantial inheritance. Although she had not received a single penny of that inheritance by the time she died, her estate ultimately received $103,712.

Ms. Cripe’s heirs argued that the Medicaid claim should be disallowed, since she had not actually received any money from her cousin’s estate prior to her own death. The Indiana Medicaid agency insisted that the entire claim should be paid, nearly consuming the estate. The Indiana judge decided on an intermediate approach; the Court granted the claim for benefits paid after the death of the cousin, even though no funds were actually received until later.

The Medicaid agency appealed to the Indiana Court of Appeals. After hearing arguments in the case, that court overruled the trial judge’s approach to the question.

Indiana had enacted a law providing for recovery after receipt of an inheritance or other resources. Ms. Cripe’s estate argued that the statute limited the power of the state to pursue recovery of the entire claim. Furthermore, claimed the estate, permitting the Medicaid agency’s claim would generate an unfair windfall for the State. The Court of Appeals did not agree, and instructed the trial court to allow the entire Medicaid claim. Elkhart County Dep’t of Public Welfare v. Estate of Cripe, January 30, 1996.

Ms. Cripe’s story points out the importance of planning for family members receiving public assistance. If Ms. Cripe’s cousin had consulted an attorney, it would have been simple to construct her estate plan to prevent the result, and even to still benefit Ms. Cripe.

New Allowances for Community Spouses

Arizona’s “Minimum Monthly Maintenance Needs Allowance” (known to its friends as MMMNA) will increase next month, to $1,295. The new figure represents an increase of about $40 over last year’s Allowance.

The MMMNA has no effect on eligibility for ALTCS (Arizona’s long term care Medicaid program). Most eligibility figures also change annually, but on January 1 rather than July 1 of each year.

The significance of the MMMNA is in calculation of the share of cost for Medicaid-eligible nursing home patients. Once Medicaid begins to subsidize a nursing home resident’s care, he or she is required to turn over nearly all his or her income (retaining only $70.50 each month for personal needs) to the nursing home.

For married couples the rules are harder. The “community” spouse is entitled to keep all his or her own income (including half of any checks naming the nursing home resident), but must turn over a portion of the income naming the institutionalized spouse each month.

The MMMNA is the minimum amount of income guaranteed to the community spouse. If his or her own income is less than $1,295, he or she keeps enough of the institutionalized spouse’s income to reach that figure. In addition, the minimum level can be increased in some circumstances.

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