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    Expanded Estate Recovery: Negative Impacts of Proposed Legislation


    MassHealth (our state Medicaid program) pays for nursing home care when your assets are spent down below the applicable financial limits. Federal and state law allows MassHealth to seek reimbursement for this benefit by making a claim after death against the individual’s estate. Presently, MassHealth estate recovery is limited to so-called “probate assets.” Probate assets are those held in the decedent’s sole name; without a joint owner or beneficiary. This means that MassHealth can only recover against assets held in the decedent’s sole name.  All other assets held at death are protected from MassHealth under current law. Governor Baker’s House budget proposal for Fiscal Year 2017 seeks to change this rule and expand estate recovery for MassHealth members to property in which the decedent had “legal title” or an “interest” in immediately before their death.

    This would include jointly held assets, life estates in real estate, and even some assets held in trust.  The law would also allow the recovery of Medicare Part D pharmacy payments made to the federal government. The laws as it stands now makes logical sense; “estate recovery” should be limited to assets in a decedent’s “estate.” Recovering from assets outside of a decedent’s estate is unfair to the most vulnerable population, unworkable administratively, will add additional burdens on the already taxed judiciary and therefore should not be supported.   

    This proposed legislation was previously enacted by the Massachusetts legislature in July 2003, but was subsequently repealed (after public uproar) due to the significant delays and confusion it caused to many families. All the money collected was ultimately refunded, resulting in an excess cost to the Commonwealth rather than the cost savings that the legislation sought. The administrative costs of this proposed legislation would be truly detrimental to the Commonwealth and its residents. Other states, including New York, have enacted similar legislation only to repeal it for lack of success.

    Families often own property jointly with survivorship rights for a variety of reasons including the management of the assets of an incapacitated family member, the avoidance of probate, and assisting in the support and needs of the extended family. This legislation would effectively allow MassHealth to seek reimbursement from these jointly held assets and expose property that would otherwise pass by rights of survivorship to MassHealth estate recovery. This result would be especially problematic for spouses who most commonly own their homes jointly. Under the proposed legislation, the surviving spouse would be unable to sell or mortgage their property without first going through the burdensome process of addressing the estate recovery claim. Other groups that will likely suffer from this legislation are the poor and uninformed who are unaware that their property interests have left them vulnerable to estate recovery. It is easy to see how this legislation would cause already grieving family members undue stress, costs and confusion. Aside from the personal aggravation it will surely cause, this proposed legislation undermines the laws that govern how property is owned and transferred and also impact the family homestead.

    Lastly, the proposed legislation will complicate the probate process for everyone in Massachusetts, regardless of whether they received MassHealth benefits. Remember, every probate as a matter of course has to provide notice to MassHealth. Expanded estate recovery will delay pay-outs on insurance and real estate transactions as families and financial institutions are forced to comply with these complex rules.  In addition it leaves families who planned to avoid probate in a state of confusion as to how ensure that there is no lien issue upon property conveyance. 

    This proposed legislation would cast even more uncertainty over long term care and special needs planning. Without laws that clearly define what is and what is not subject to estate recovery, special needs planners will be unable to effectively plan for their clients and assure them that they will be protected.

     If you oppose this legislation please contact your state legislators and let them know how you feel.   

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