Medicaid estate recovery - Confused and a bit concerned

[EnjoyTheJourney]

We can be eligible to have all four of us to have medicaid for the year of my early retirement (2022). However, I am over 55 and my wife will be 55 quite soon, while our sons are under 10 years old. And so, we're wondering about the medicaid estate recovery provision; we never even heard of it until I started the application process online a little while ago.

The criteria for exemptions to the recovery provision are clearly laid out and potentially helpful. One of our sons is autistic and always will be and so would be (I believe) declared a "surviving child who is permanently and totally disabled as determined by the Social Security Administration." Thus, our estate may be immune to the recovery provision for at least as long as our son on the spectrum is alive. But, it sounds like it could be potentially messy, nonetheless, particularly if we decide to leave the US and live elsewhere. 

In case somebody wanted to learn more about this provision, here is a link to a PDF provided by the NJ state government ...

https://www.state.nj.us/humanservices/dmahs/clients/The_NJ_Medicaid_Program_and_Estate_Recovery_What_You_Should_Know.pdf

One issue of concern is that once benefits are received there are paperwork requirements that basically follow you around for life and that would need to be remembered potentially many years down the road. Also, when recovery is sought, to what extent might they charge interest or adjust for inflation when seeking recovery of funds provided? So, for example, would $100 in benefits today balloon into something sizably larger in the future?

Thank you in advance for any clarity that can be provided.

[Captain FIRE]

Yes, estate recovery is actually required by federal law (and possibly your state law too, I don't know).  States don't have a choice about it though some are more or less aggressive in their collection.  There is some sympathy for smaller estates (e.g. my state does not recover from estates under $25k).

In my state interest is charged, yes.  On a quick, it  looks like 12% 6 months after the appointment of personal representative, but I imagine this varies by state.

[Mrs Brightside]

It seems to mainly target estate recovery for long term care. I’m sure there are strategies to protect your assets that are available for those with the means to pay an elder law attorney. Given the high stakes especially if you have a disabled child, it’s probably worth your while to bring in an expert and do some advanced planning. If you really are talking about one year of Medicaid and it is concerning you that much, why not go for ACA then?

[EnjoyTheJourney]

It seems to mainly target estate recovery for long term care. I’m sure there are strategies to protect your assets that are available for those with the means to pay an elder law attorney. Given the high stakes especially if you have a disabled child, it’s probably worth your while to bring in an expert and do some advanced planning. If you really are talking about one year of Medicaid and it is concerning you that much, why not go for ACA then?

After a bit of research the provision makes much more sense now. Long term care is so, so expensive that it makes sense asset recovery would be desired.

Opting for ACA may emerge as the preferred solution. It's more expensive in the short run. But, having a kind of lien on our assets following us around and paperwork requirements extending well into the future seems unappealing.

[Captain FIRE]

Ahh, please be careful.  In my state, it is not just limited to LTC.  That might relate to what I said above on different states being more or less aggressive.

I don't have much more to share, but you can PM if you want.  I worked on related matters slightly in my last job.

[SimpleCycle]

Talk to an attorney, it’s state dependent and there are complicated rules.  I wouldn’t assume your autistic son would automatically be considered disabled, many people with autism work and have careers, which would preclude a finding of disability.

[jim555]

Looks like NJ does it even for ACA Medicaid.  NY only does it for nursing home recovery over age 54.  States are only required to do it for nursing home cases, but some states are more aggressive then required.

[EnjoyTheJourney]

Talk to an attorney, it’s state dependent and there are complicated rules.  I wouldn’t assume your autistic son would automatically be considered disabled, many people with autism work and have careers, which would preclude a finding of disability.

Thank you for the offer of help.

I've read the document explaining how estate recovery works in New Jersey and asset recovery is very clearly not restricted to nursing home payments. Thus, we would effectively have a lien placed on our estate for any and all monies paid to my spouse and I for any purpose by medicaid, including expenditures related to health. Interest charges would apply to such recoveries at an interest rate that the state government could change at any time, with no recourse on our part.

We're determined to avoid that kind of entanglement, going forward, whether or not one of our two sons would be immune to recovery.

[SimpleCycle]

Yeah, it seems like NJ is particularly aggressive.  And your point about changing rules going forward with no recourse is very good.  Looks like ACA is in your best interest, which means keeping income above 100% FPL so that you don't fall out of ACA eligibility into Medicaid only.

[jim555]

Yeah, it seems like NJ is particularly aggressive.  And your point about changing rules going forward with no recourse is very good.  Looks like ACA is in your best interest, which means keeping income above 100% FPL so that you don't fall out of ACA eligibility into Medicaid only.

That would be above 138% since they have Medicaid expansion.