Medicaid Estate Recovery Program — Nevada

For individuals age 55 or older, states are required to seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States have the option to recover payments for all other Medicaid services provided to these individuals. Skip to Nevada Supreme Court ruling and the actual Nevada law.

Background of Medicaid Estate Recovery Program

Huffington Post: Under a Medicaid estate recovery program, a state can seize your assets to pay for care after using Medicaid. Currently, recovery programs vary from state to state, with some states taking back money from estates to cover the cost of all Medicaid services, while others recoup only money for long-term care and still others recouping costs for additional, specific items.

Fact Check: The Seattle Times published an article on Dec. 15 that said: “If you’re 55 or over, Medicaid can come back after you’re dead and bill your estate for ordinary health-care expenses.”

The Times is right that the state of Washington has this power, but it was not in the “fine print” of the Affordable Care Act. All states have had the option since Medicaid began in 1965 to recover some Medicaid costs from recipients after they die, as the Department of Health and Human Services explains in a 2005 policy brief.

In 1965, it was optional and states could only recoup Medicaid costs spent on those 65 years or older. That changed in 1993, when Congress passed an omnibus budget bill that required states to recover the expense of long-term care and related costs for deceased Medicaid recipients 55 or older. The 1993 federal law also gave states the option to recover all other Medicaid expenses.

The Affordable Care Act did nothing to change existing federal law. It did, however, expand the number of people who are eligible for Medicaid, so there will be more people on Medicaid between the ages of 55 and 65, and, therefore, potentially more estates on the hook for Medicaid expenses after the beneficiary dies.

Congress rejected the idea of taking from estates of surviving spouses, but it did make it mandatory for states to recover the cost of long-term care (such as nursing home care or home health care) in the Omnibus Budget Reconciliation Act of 1993. That law also reduced the age of deceased recipients whose estates are subject to the recovery from 65 or over to 55 or over. (Congress kept the prohibition on estate recovery in cases when there is a surviving spouse, a child under the age of 21 or a child of any age who is blind or disabled.)

From Medicaid.Gov --

State Medicaid programs must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee. For individuals age 55 or older, states are required to seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related hospital and prescription drug services.

States have the option to recover payments for all other Medicaid services provided to these individuals except Medicare cost-sharing paid on behalf of Medicare Savings Program beneficiaries.

Under certain conditions, money remaining in a trust after a Medicaid enrollee has passed away may be used to reimburse Medicaid. States may not recover from the estate of a deceased Medicaid enrollee who is survived by a spouse, child under age 21, or blind or disabled child of any age. States are also required to establish procedures for waiving estate recovery when recovery would cause an undue hardship.

States may impose liens for Medicaid benefits incorrectly paid pursuant to a court judgment. States may also impose liens on real property during the lifetime of a Medicaid enrollee who is permanently institutionalized, except when one of the following individuals resides in the home: the spouse, child under age 21, blind or disabled child of any age, or sibling who has an equity interest in the home. The states must remove the lien when the Medicaid enrollee is discharged from the facility and returns home.

The home is an exempt asset for purposes of qualifying for Medicaid. However, this does not mean that it is exempt from estate recovery. In fact, the home is the asset most frequently sought in Medicaid Estate Recovery.

The Nevada Supreme Court’s Ruling on April 1, 2004 ruled on Medicaid Estate Recovery in the case of State of Nevada Department of Human Resources v. Estate of Ullmer. The lower court prohibited the State from placing Medicaid liens against homes of surviving spouses of Medicaid recipients.

The Nevada Supreme Court ruled that the State may impose a lien, subject to certain limitations, before the surviving spouse’s death upon property in which it has a legitimate interest. 

The Court said that the state “will release the lien upon the surviving spouse’s demand for any bona fide transaction, including, but not limited to, selling the property, refinancing the property, and obtaining a reverse mortgage.” However, “the state’s interest is not extinguished when the deceased recipient’s interest in the property is transferred for less than fair market value.”

This means that if the surviving spouse wants to sell the house, refinance or obtain a reverse mortgage, the lien must be lifted. If the house is gifted to someone, the lien will remain. The Court also said that the lien must be limited to the deceased Medicaid recipient’s interest in the home. For example, if the husband and wife own the property as joint tenants, then the state can only lien a one-half interest in the property.

Nevada Law (Legislature): NRS 422.29306 Imposition and release of lien on property of recipient of Medicaid

1. The Department may, to the extent not prohibited by federal law, petition for the imposition of a lien pursuant to the provisions of NRS 108.850 against real or personal property of a recipient of Medicaid as follows:

(a) The Department may obtain a lien against a recipient’s property, both real or personal, before or after the death of the recipient in the amount of assistance paid or to be paid on behalf of the recipient if the court determines that assistance was incorrectly paid for the recipient.

(b) The Department may seek a lien against the real property of a recipient at any age before the death of the recipient in the amount of assistance paid or to be paid for the recipient if the recipient is an inpatient in a nursing facility, intermediate care facility for persons with intellectual disabilities or other medical institution and the Department determines, after notice and opportunity for a hearing in accordance with applicable regulations, that the recipient cannot reasonably be expected to be discharged and return home.

2. No lien may be placed on a recipient’s home pursuant to paragraph (b) of subsection 1 for assistance correctly paid if:

(a) His or her spouse;

(b) His or her child who is under 21 years of age, blind or disabled as determined in accordance with 42 U.S.C. § 1382c; or

(c) His or her brother or sister who is an owner or part owner of the home and who was residing in the home for at least 1 year immediately before the date the recipient was admitted to the medical institution, Ê is lawfully residing in the home.

3. Upon the death of a recipient, the Department may seek a lien upon the recipient’s undivided estate as defined in NRS 422.054

4. The amount of the lien recovery must be based on the value of the real or personal property at the time of sale of the property.

5. The Director shall release a lien pursuant to this section:

(a) Upon notice by the recipient or the representative of the recipient to the Director that the recipient has been discharged from the medical institution and has returned home;

(b) If the lien was incorrectly determined; or

(c) Upon satisfaction of the claim of the Department.

Added to NRS by 1995, 2565; A 1997, 650, 1242, 2627; 1999, 878, 2242, 2244; 2003, 875; 2007, 2392; 2013, 695)