“Ohio Medicaid collects millions from families after death.”

The Dayton Daily News recently ran several articles about their investigation of Ohio’s Medicaid Estate Recovery (MER) system featuring headlines such as this one.  These articles reported that Ohio Medicaid collected $87.5 million in 2022 from the estates of deceased Medicaid recipients—and that Ohio collects more in estate recovery than almost any other state in the country. While the facts are true, the headlines are likely slightly sensationalized to grab your attention. Did it work?

In the weeks following these articles, we’ve received several questions from clients about what steps they should take to decrease the chances of MER  affecting their loved ones. This is such an important topic, we thought it would be helpful to share our advice with everyone. It’s important to understand the facts about how MER works and when it applies—because there is so much misinformation out there about Medicaid and the MER program.

If a person is 55 or older and receives Medicaid benefits, then their estate is subject to MER after death.  However, MER will never apply until the Medicaid recipient’s surviving spouse (if any) has also died. Likewise, if the Medicaid recipient has a child under 21, or who is blind or disabled, MER will not apply until that child has died or reached the age of 21.

One common misunderstanding that we hear from fearful clients is that Medicaid will take their home.  While it is true that MER can eventually place a lien on the home, remember that this cannot occur while there is a surviving spouse, child under 21, or a blind/disabled child. This often provides a huge sense of relief to family members.

Sometimes an “Affidavit Related to Title” will be filed with the County Recorder’s office after the Medicaid recipient has died. This is not a valid lien—and we can assist if this issue ever comes up. It can be scary to see something that looks like a lien attached to your real estate online…and it can cause a great deal of confusion with title companies if you want to sell your home.

At the time when an estate is subject to MER, any asset in which the Medicaid recipient owned an interest at the moment before his death is subject to recovery. This includes assets that pass through probate under the terms of a Will…but also non-probate assets, such as retirement accounts, that pass to a designated beneficiary.

If a decedent was on Medicaid prior to death, it is important to consult with an attorney for assistance with notifying Medicaid and ensuring the MER claim is properly settled. In some cases, it is possible to settle the claim for less than what is actually owed.

If you are concerned about MER and its impact on your ability to pass your estate to your loved ones, the best course of action is to put a proactive plan in place. In most cases, the only surefire way to avoid MER is to remove assets from your estate at least 5 years in advance of a Medicaid application being filed. We generally do this with Medicaid asset protection trusts (MAPTs). We typically recommend choosing your favorite assets to put into the MAPT, because you don’t want to gift away too much and leave yourself strapped for money during your life. For many clients who own their home without a mortgage, transferring the home to the MAPT is an easy way to protect part of their estate from MER, without impacting their day to day spending.

If you have any questions about MER or its potential impact on your estate, please give us a call. We would be happy to help discuss planning strategies and clarify any concerns that you may have related to this very important (and very confusing) topic.