Did you know, Medicaid is a “Loan Program” for Seniors?

Susan M. Graham, Certified Elder Law Attorney, Senior Edge Legal, Boise, Idaho

If a spouse is in a nursing home, with the nursing home bills being paid under the Medicaid program, when both spouses die, the State of Idaho will want to be paid back for what they paid out.  Where will they get the money?  They will look to the marital assets owned by both spouses, no matter whose name is on the titled asset.

The Idaho Supreme Court issued a ruling last month[1], that allowed the Idaho Department of Health and Welfare to be reimbursed from Emerson Wiggins’ assets, for the funds they paid for the cost care for his wife, Vivian Wiggins.  When Vivian died, the state had paid over $250,000 in benefits.  A few months after Vivian died, Emerson died.  To qualify for Medicaid, Vivian had to transfer everything she owned to her husband, including her one-half interest in their community (marital) property assets.  The Medicaid rules required that she enter into a written marriage contract (marriage settlement agreement) where all the assets are transferred to her husband before she could qualify for Medicaid.  Once the transfer of the assets was complete, Vivian owned nothing and Emerson owned everything.

The Idaho Supreme Court reviewed both the Idaho and federal Medicaid laws and held that while 42 U.S.C. § 1396p(b)(1) allowed for recovery against only the individual’s estate (Vivian), Idaho Code § 56–218(1) permitted recovery against both the individual’s estate and the estate of the surviving spouse. Federal law granted states the authority to broaden the “estate” for purposes of recovering medical assistance. Per state law, the Marriage Settlement Agreement did not remove the community property from the estate for purposes of recovery.

When planning for a spouse to receive Medicaid benefits, often significant assets can be protected and available for the healthy spouse.  Just remember, when both spouses die, the State will look to both the estate of the Medicaid recipient and the estate of their spouse to be repaid.  Is there any way to protect the assets?  The answer is “sometimes.”  To find out what can work for an individual family, I recommend you contact a Certified Elder Law Attorney to get answers that match the unique circumstances of that family.