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There are two steps which elderly clients should consider if they believe that they will or want to qualify and receive Medicaid benefits.  The first is to use Medicaid planning to transfer assets out of their estates prior to applying for Medicaid benefits.  The second is to learn how Medicaid Estate Recovery can impact the recipient's estate following the recipient's death, and plan to limit this impact.  This brief article discusses step two – What happens to a person's estate after that person has qualified and received Medicaid.

What is Estate Recovery?
Medicaid Estate Recovery is the State of Georgia's right to seek reimbursement from the estate of someone who used the Medicaid system prior to their death.  In 2006, the Georgia Department of Community Health (DCH) began seeking reimbursement from the estate of the Medicaid recipient for the Medicaid funds provided to the recipient during life.  Prior to 2006, the State of Georgia did not actively seek to recover Medicaid funds.

How does Georgia Recover Funds?
First, the State will issue a letter to the estate, giving Notice of the State's intent to file a claim against the Estate.  This letter will estimate the total Medicaid benefits paid on behalf of the decedent (the person who passed away).  The letter will explain that the estate can pay for the amount of Medicaid received, or apply either for an exemption or deferral from estate recovery.  If an exemption is granted, then Georgia will not attempt to recover funds from the estate.  If a deferral is granted, the State will delay seeking reimbursement.  If the estate fails to pay, and does not qualify for exemption, then the State may place a lien on either the real and personal property of the decedent's estate.  However, there are exceptions to when the State may exercise its rights as a lien holder.

Can I avoid Estate Recovery?
Not easily.  As a rule, if the decedent's total estate value is less than $25,000, Georgia will not look to your estate to recover funds.  One common way to prevent estate recovery is to reduce the value of the decedent's estate below the $25,000 threshold.  The State also may defer a property from estate recovery if a spouse, sibling, or child of the Medicaid recipient is living in the recipient's primary residence.  There are other methods to delay estate recovery such as putting the property up for sale. 
 
Once a person is already receiving Medicaid, the options available to that person to reduce the impact estate are limited.  The best planning for Estate Recovery will take place more than 5 years before a person applies for Medicaid and is part of a Medicaid planning process.

Other Resources:  Georgia Department of Community Health information on the Estate Recovery Process