Medicaid Liens

From WFG Wiki


State officials may assert a lien against medicaid beneficiaries under circumstances set forth in state law, but it must be consistent with the general parameters of federal law set forth in 42 U.S. Code § 1396p.

It has been an evolving standard. Medicaid liens on real property of deceased recipients have been permitted since the beginning of the Medicaid program. They have also been authorized in limited circumstances on real property of living recipients since 1982. States have increased their use in response to the 1993 estate recovery mandate, enacted in the Omnibus Budget Reconciliation Act (OBRA ‘93). This legislation required states to recoup the costs of long-term care and related Medicaid services from the estates of certain deceased recipients.

OBRA 93 mandates the state attempt recovery against the estate of deceased beneficiaries who meet the following requirements:

  • Were age 55 or older when they received Medicaid benefits;
  • Had been determined to be permanently institutionalized, regardless of age; and
  • Were not survived by a spouse or certain other dependents deemed to have a deserving claim on the estate.

There are two types of Medicaid liens for benefits that have been correctly paid -- pre-death or TEFRA liens and post-death or estate Other recovery tools are available as to incorrectly paid benefits.

Each state sets their own standards on when liens will be placed, and released and the mechanics to be followed.

  • Louisiana adopted a policy standard guiding its Department of Health and Hospitals in RS 46:153.4

Pre-death Liens

TEFRA pre-death liens all the state to prevent Medicaid long-term care recipients from giving away assets -- specifically a home in which they no longer reside -- before they are used to offset long-term care expenses paid by Medicaid on their behalf. When states elect to use this option, the financial interests of Medicaid are given precedence over the interests of adult children or others who reside in or claim an interest in the homes of institutionalized Medicaid recipients who no longer live in them and may never do so again.

The use of pre-death liens is very narrow under 42 U.S. Code § 1396p(a)(1).

  • No lien may be imposed against the property of any individual prior to his death on account of medical assistance, except—
    • pursuant to the judgment of a court on account of benefits incorrectly paid on behalf of such individual, or
    • in the case of the real property of an individual—
    • (i) who is an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution, if such individual is required, as a condition of receiving services in such institution under the State plan, to spend for costs of medical care all but a minimal amount of his income required for personal needs, and
    • (ii) with respect to whom the State determines, after notice and opportunity for a hearing (in accordance with procedures established by the State), that he cannot reasonably be expected to be discharged from the medical institution and to return home, except as provided in paragraph (2).
  • The liens are further restricted in that No lien may be imposed on the home if the home is lawfully occupied by:
    • the spouse of the beneficiary
    • the beneficiary's child who is under age 21, or is blind or permanently and totally disabled, or
    • a sibling of the beneficiary who has an equity interest in such home and who was residing in such individual’s home for a period of at least one year immediately before the date of the individual’s admission to the medical institution),

The pre-death liens are recorded according to the HHS Policy Paper on Medicaid liens cited below. Note I did not find an express statement of this in 42 USC. States have a degree of authority as to how they choose to implement the Federal law on seeking recovery.

Post-Death (Non-TEFRA or Estate Recovery) Liens

Federal guidelines allow states broad flexibility in the design of their Medicaid estate recovery programs. At a minimum, they direct states to pursue recovery of assets conveyed through probate -- a legal process governed by state law and enforced through the probate court that settles wills or conveys property in the absence of a will. At a maximum, they give states the option to expand the definition of “estate” to include any or all assets outside of probate, defined by Federal law as “any other real and personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including such assets conveyed to a survivor, heir, or assignee of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.” Individual state property and probate laws determine how, when and if a state will assert its right to recover Medicaid expenses from non-probate assets under either definition of estate.

HHS Policy Paper on Medicaid Liens