JANUARY 4, 1999 VOLUME 6, NUMBER 27
About half the cost of all nursing home care in this country is paid by the federal-state Medicaid program. The program is available to individuals who have reduced their assets below $2,000 (not counting homes, autos and a handful of other exempt assets). When the nursing home resident is married, he or she may qualify for Medicaid even though the spouse still living at home has assets; the "community spouse" may be permitted to retain as much as $81,960 (in 1999) in liquid assets.
Another difference between single and married Medicaid recipients becomes important on the death of the recipient. If a person is receiving Medicaid benefits at the time of death, the state Medicaid agency will have a claim against his or her estate for the cost of those benefits. It has long been federal law, however, that if the recipient's spouse survives Medicaid may not make a claim for recovery. Two recent cases, in North Dakota and Idaho, raise the possibility that such claims may be made after the later death of the spouse.
When Nathaniel Thompson went into a nursing home in North Dakota, his care was paid for by Medicaid. His wife Victoria was permitted to retain some assets, and the program contributed $58,237.30 to his care during his two-year stay.
Nathaniel Thompson died in 1992. Since his wife survived him, the Medicaid agency could not make any claim against his estate. When Victoria Thompson died three years later, however, the state made a claim against her estate. Since she left only $46,507.98, the state's claim essentially sought her entire estate.
Victoria Thompson's Personal Representative objected, citing the federal law which prohibits estate recovery when a Medicaid recipient leaves a surviving spouse. The agency successfully argued that North Dakota law permitted the claim, and that the federal law did not override North Dakota's statute.
On appeal, the North Dakota Supreme Court agreed with the state agency. Mrs. Thompson's estate was required to pay the claim for her husband's care, at least to the extent of any assets which she had received from him "through joint tenancy, tenancy in common ... or other arrangement." Estate of Thompson, December 22, 1998.
Lionel and Hildor Knudson lived in Idaho. When Mrs. Knudson entered a nursing home, their niece (acting as Mrs. Knudson's conservator and as Mr. Knudson's agent under a durable power of attorney) divided their assets into two shares; Mrs. Knudson was permitted to retain only her personal effects, a burial account and a small bank account. The Medicaid program then paid for her care for nearly two years, with total payments amounting to $41,600.55.
Mrs. Knudson died in 1994. Although Mr. Knudson did survive her, it was not for long; he died two weeks later. The Idaho Medicaid agency made a claim against Mr. Knudson's estate for the care provided to his wife.
Although the trial judge disallowed the claim, the Idaho Supreme Court disagreed. Noting that state law permitted the claim, the justices returned the case to the trial court for a determination about what, if any, assets had been acquired as community property after division of the assets by the couple's niece. The agency would be permitted to make its claim against any such assets. Estate of Knudson, November 2, 1998.
Arizona law provides a very different result. Recognizing the clear language of the federal law, Arizona makes no claim against the estate of a surviving spouse for care provided to the institutionalized spouse. Arizona has not attempted to adopt an estate recovery law like those in North Dakota and Idaho.