There is a lot of misinformation and confusion surrounding estate recovery and the Maine Medicaid (MaineCare) long-term care benefit. One of the biggest fears we hear from aging Mainers is, “I don’t want the State to take my house.” That only happens in the context of a process called estate recovery. Estate recovery can only proceed after the death of a MaineCare recipient.

Our office often works with individuals who never relied on public benefits in their younger years. However, when a health care crisis strikes, they are turning to MaineCare long-term care benefits for help with expensive long-term care costs. MaineCare can pay for care in a nursing home or assisted living facility, and for some nursing services at home through the Home and Community Based Services waiver.

When applying for MaineCare long-term care benefits, the applicant’s primary residence will be an excluded asset if:

  1. They are living in the home or intend to return home; and
  2. The equity in the home is less than or equal to $750,000

The home will also be excluded if:

  1. The applicant’s spouse resides in the home
  2. A child under the age of 18 resides in the home; or
  3. A child who is blind or disabled resides in the home

This means that an individual can keep their home and receive MaineCare benefits.

Although certain assets (like the home) can be exempt while the individual who is receiving MaineCare is living, any exempt assets will likely be exposed to Medicaid estate recovery after the MaineCare recipient dies. Pursuant to estate recovery law in Maine, the definition of “estate” is very broad.

The Department of Health and Human Services (DHHS) can pursue recovery against not just the probate estate but against any legal interest the MaineCare recipient held at the time of death. Currently, the only exception is a joint tenancy interest in real estate. In this scenario, the home would pass to the surviving party (typically a spouse).

If the home is sold during the MaineCare recipient’s lifetime, the proceeds of the sale become an available asset and MaineCare benefits may end until the proceeds from the sale are spent down. If the MaineCare recipient has a legal interest in the home at the time of death, then it is an asset subject to creditor claims. This includes a claim by the State of Maine for reimbursement of MaineCare benefits.

Under current estate recovery rules, there is no estate recovery if there is a surviving spouse or child with a disability. Certain planning strategies may also be available prior to an application for MaineCare benefits (and, in the case of spouses, after application for MaineCare benefits) in order to avoid MaineCare’s claim for recovery against the home after the death of the MaineCare recipient.

These strategies can also be used to prevent the sale of the home from disqualifying the MaineCare recipient from benefits. Discuss any specific circumstances with an elder law attorney, and include a discussion of your financial circumstances and estate planning objectives.

If you have questions about MaineCare and estate recovery or would like to speak to a qualified elder law attorney, please contact Rudman Winchell.

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