For 2021, the average cost of a year in a Maryland long-term care facility was $146,000. Unless you can afford to cover that kind of expense out of pocket, you will likely need to depend on Medicaid to help you if you need long-term care (LTC) in the future. One of your biggest fears, however, may be the commonly held belief that to qualify for Medicaid you will have to give up your home or other valuable assets. The good news is that your home is usually an exempt asset for purposes of determining your initial eligibility for Medicaid. The bad news is that the Medicaid Estate Recovery Program (MERP) could still be a threat to your home after your death. Let’s dive into exactly what that means.
Because Medicaid is a “needs-based” program, the program uses both income and assets limits to determine eligibility. This means that an applicant cannot have “countable resources” valued in excess of the program limit to be eligible. In Maryland, the countable resources limit is between $2,000 and $2,500 for an individual, depending on a few factors. Some assets, however, are exempt from consideration when applying for Medicaid, such as your primary residence. If an applicant’s non-exempt assets exceed the limit, the application will be denied and the applicant will then need to “spend-down” the excess assets before he/she is eligible for benefits. As you can see, an entire retirement nest egg could be depleted in record time if the applicant failed to plan ahead using Medicaid planning strategies and tools. The purpose of including Medicaid planning in your overall estate plan is to ensure that your assets are protected when it comes time to apply for Medicaid. But getting approved for Medicaid benefits does not mean you are completely out of the woods. Your exempt assets could still be at risk once they become part of your estate after your death.
The general concept behind the Medicaid Estate Recovery Program, or MERP, is for a state to have a mechanism for recouping funds paid on behalf of a Medicaid recipient for long-term care expenses. In fact, federal law requires states to try and recoup these funds when possible. In Maryland, the Division of Recoveries is responsible for administering the MERP program. The Division of Recoveries will pursue recovery from the estates of deceased recipients when legally possible. Recovery is usually pursued by filing a claim against the open estate of the deceased. For Medicaid recipients, the Division of Recoveries will seek to recover all payments made on behalf of the recipient after the recipient became age 65.
Fortunately, there are limitations to what can be recovered by the MERP program. For example, in Maryland, the Division of Recoveries will not pursue recovery if you were married at the time of your death, if you have an unmarried child under the age of 21, or if you have a blind or disabled child of any age. Maryland is also one of many states that has a catch-all “undue hardship” exemption option. Exactly what circumstances qualify as an “undue hardship” is, unfortunately, subjective, and is left up to the individual reviewing the request for a hardship waiver to decide. Instead of leaving the fate of your assets in the hands of a government administrator whose job it is to recoup as much money as possible for the State, consult with an experienced Estate Planning attorney to discuss Medicaid planning strategies that you can include in your overall estate plan to prevent recovery of any estate assets.
Contact an Annapolis Estate Planning Attorney
For more information, please join us for an upcoming FREE WEBINAR. If you have additional questions or concerns about the Medicaid MERP program, contact an experienced Annapolis estate planning attorney at Sinclair Prosser Gasior by calling (410) 573-4818 to schedule an appointment.