Will the State Take My Home?

[This article was originally published on July 18, 2002.  The links were updated on June 15, 2018.]

"Will the State take my home if I go into a nursing home?" I am asked this question more than any other. Many people are concerned about Medicaid paying for their nursing facility care and state government coming in and taking their home away from them. What really happens is that benefits paid for by Medicaid on your behalf results in a debt to the Arkansas Department of Human Services (DHS). This debt can be claimed against your estate upon your death. DHS will not seek to recover the debt if it is too expensive for it to do so, or if it results in a hardship to your family.

To better explain, the state does not take away your home to pay for your nursing home care. At least not while you are alive. If you are a Medicaid applicant, your home is exempt from consideration as an available asset when eligibility for Medicaid is determined. However, while you may exempt your home and thus be eligible for Medicaid payments during your lifetime, upon your death the house is no longer exempt. If you receive Medicaid benefits the Department of Human Services may attempt to recover the cost of your care after your death.

When you apply for Medicaid for nursing facility services, intermediate care facility services for the mentally retarded, or home and community based care services, the DHS county office will give you an estate recovery notice. The notice states in general that if you receive Medicaid for one of these services, the total amount of Medicaid benefits paid on your behalf will be a debt to DHS.

This debt may be recovered from your estate after your death. A claim will not be made against your property while you are living. DHS will collect the debt, if any, by filing a claim against your estate after your death. The amount of recovery is limited to the cost of services provided. Only the cost for those services received on or after August 15, 1993, can be recovered.

Upon your death, state law requires in most cases that the personal representative of your estate shall promptly mail to the creditors of your estate, including the Department of Human Services, a copy of the notice of their appointment. A copy of the petition for probate of your will or administration of your estate and your Social Security number shall be attached to the notice. Notice to DHS also includes notice of an affidavit for an estate of $50,000 or less. (This is basically a quick probate procedure for small estates.)

The Department of Human Services will then determine if any Medicaid benefits were paid. If so, a Notice of Estate Recovery will be mailed to your personal representative or distributee of your estate. A claim can then be filed against your estate.

The DHS will not seek recovery from your estate when:

• it is not cost effective for it to do so;
• there is a surviving spouse, dependent children under age 21, or blind or disabled children; or
• recovery will create an undue hardship of other surviving family members.

DHS cannot seek recovery from another family member who is not legally responsible for your bills. This means that your son or daughter cannot be forced to pay your creditors out of their own pocket.

DHS cannot recover from property not included in your estate. Your "estate" under Arkansas law, with respect to a deceased individual, means all real and personal property owned by you at your death.

The personal representative or distributee of your estate may apply for a hardship waiver. Undue hardship has been defined by DHS as the following:

Undue hardship may exist when the estate''s asset is the sole asset of the survivors, the asset is their sole source of income, the income is not sufficient to meet their living expenses and also repay the debt to DHS, or there are other compelling circumstances such as the assets cannot be readily converted to cash.

To summarize, benefits paid for by Medicaid on your behalf results in a debt to the Department of Human Services. This debt can be claimed against your estate upon your death. DHS will not seek to recover the debt if it is too expensive for it to do so, or if it results in a hardship to your family.

Nothing in this article is intended to be taken as legal advice.

Copyright 2002 by Raymon B. Harvey, all rights reserved, may not be reproduced without express permission of the author

Raymon B. Harvey Attorney at Law
One Financial Centre
Little Rock, Arkansas
501-221-3416