Why Estate Recovery Sounds Worse Than It Is

We recently received a distressed call from a husband that we represented about a year ago on a long-term Medicaid application for his wife who was a local nursing facility resident. We had done an asset protection plan for the husband, preserving approximately $300,000 more than he had expected, plus the house, the couple’s car and his retirement account. He was tickled pink about the result that we received. Unfortunately, his wife recently died, and he received a letter in the mail, coming into my office extremely upset. The letter was from the Estate Recovery Department office in Harrisburg, requesting information about the deceased, including the cause of death, how much money she had and how the assets were titled. The husband had made comments throughout the original planning process that it all seemed “too good to be true”. He was extremely pleased, but remained cautious. When he entered my office with the letter in hand, he commented, “See, I knew it. We’re in big trouble.” I looked at him and asked why he felt that way. I reviewed the form and explained that it was nothing more than an information/fact gathering sheet and did not mean that the answers should be interpreted as negative.

Estate recovery in the Commonwealth of Pennsylvania only pursues the probate estate of a Medicaid recipient if their assets are over $2400. In a situation where we qualify someone for Medicaid, we make sure there is no more than $2400 in assets for the client, so that we know the individual is always below the amount the Commonwealth will go after in estate recovery. Furthermore, we always make sure that the couple’s house is in the community spouse’s name alone, so that there is no situation wherein if the spouse predeceases the Medicaid recipient, the house ends up back in their name and at risk for estate recovery. It sounds complicated, but for a firm who understands the rules, our team makes sure that everything is done appropriately—that all the i’s are dotted, and all the t’s are crossed. I assisted the gentleman with the form, which he submitted that afternoon. He couldn’t thank us enough for our advice and assistance.

One comment that I would like to make is that when you are working with a professional, please do not talk to outside people who are not involved in the situation. This even means other professionals, because it is very difficult to understand everything that is going on unless you are involved in it. Oftentimes, people think that they’re helping by providing advice, but because they don’t know the context, sometimes they mislead an individual and it causes a lot of stress. In this case, the gentleman had received bad advice from a friend, but once we were able to clear it up and explain to him why there was nothing that they could go after, everything was taken care of, and all was right in the world. If done properly, estate recovery is never an issue and only becomes a problem when people do not know how to properly plan.


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