A common question which we encounter in our Florida estate and probate practice is whether a person’s estate will owe any money to Medicaid upon the person’s death. Usually the reason for their question is that the person has received Medicaid benefits prior to their death. Many times, those benefits were as a result of Medicaid paying for the deceased person’s long term care in their final years.
Florida’s implementation of Medicaid includes what is named the “Medicaid Estate Recovery Act” set forth in Section 409.9101, Fla. Stat. The Act provides that if a person 55 years of age or older receives public medical assistance, the monies paid create a debt owed to the Agency for Health Care Administration (“AHCA”). Unless certain exceptions apply, this debt will have to be repaid at the person’s death.
So, for example, if Nancy, age 73, receives medical payments through AHCA, when Nancy dies, AHCA may file a claim against Nancy’s Estate seeking repayment. Such a claim is considered a Class 3 claim under Section 733.707, Fla. Stat., meaning that it gets high priority to be repaid.
So if AHCA files a claim against a loved one’s Estate, is there any way around it? The answer is “maybe.” There are some exceptions. First of all, the debt created under the Act may not be enforced if the recipient is survived by: (a) a spouse; (b) children under 21 years of age; or (c) children who are blind or permanently and totally disabled pursuant to the eligibility requirements of Title XIX of the Social Security Act. So in the example above, if Nancy has a spouse, or her children are under 21, her assets would not be subject to AHCA’s claim under the Act.
In addition, the Act allows for the Personal Representative or any heir of the Estate to apply for relief based on “undue hardship.” The Act lays out certain criteria to be applied to determine such hardship. The following criteria are to be considered by AHCA in reviewing a hardship request:
(a) The heir:
1. Currently resides in the residence of the decedent;
2. Resided there at the time of the death of the decedent;
3. Has made the residence his or her primary residence for the 12 months immediately preceding the death of the decedent; and
4. Owns no other residence;
(b) The heir would be deprived of food, clothing, shelter, or medical care necessary for the maintenance of life or health;
(c) The heir can document that he or she provided full-time care to the recipient which delayed the recipient’s entry into a nursing home. The heir must be either the decedent’s sibling or the son or daughter of the decedent and must have resided with the recipient for at least 1 year prior to the recipient’s death; or
(d) The cost involved in the sale of the property would be equal to or greater than the value of the property.
Even if AHCA’s claim is enforceable and does not fall within one of the exceptions, it doesn’t mean AHCA will always get paid. The reason is that the debt owed to AHCA shall only be paid from non-exempt assets of the Estate. Under Florida law, certain assets are protected from the claims of creditors, including AHCA. A prime example of this is with protected homestead, i.e. their primary residence. If Nancy died and the primary asset of her estate is her homestead and if she devised her homestead to her children, then the homestead would pass free of AHCA’s claim. In contrast, if the primary asset of the Estate is a money-market account titled only in Nancy’s name, the money in that account would be subject to the valid claims of creditors, including AHCA.