The Medicaid Estate Recovery Program (MERP) is a federal initiative that allows states to recover certain benefits paid out through Medicaid. If you receive long-term care services funded by TennCare (Tennessee’s Medicaid program), your estate could be impacted by MERP. Knowing how estate recovery works in Tennessee can help you take proactive steps to safeguard your assets. With that in mind, a Murfreesboro estate planning attorney at Bennett | Michael | Hornsby explains the Medicaid Estate Recovery Program in Tennessee.
What Is Medicaid Estate Recovery?
When someone who received Medicaid benefits through TennCare passes away, the State of Tennessee has the right to seek reimbursement
for long-term care expenses that were covered by TennCare. This typically includes nursing home costs, home-based care, and related medical services. The purpose of the MERP program is to recover funds that can then be used to support Medicaid for future recipients. The Medicaid Estate Recovery Program in Tennessee allows the state to seek reimbursement from assets included in the recipient’s probate estate which may include real estate (including your primary residence), bank accounts, investment accounts, vehicles, and personal property. Any assets that are part of your probate estate could be subject to recovery by MERP.
Who Is Affected by Estate Recovery in Tennessee?
Medicaid estate recovery in Tennessee applies to individuals who were at least 55 years old when they received Medicaid assistance for long-term care. Additionally, estate recovery may apply to individuals of any age who were permanently institutionalized in a nursing facility. Recovery efforts, however, only extend to assets that remain in the Medicaid recipient’s estate at the time of death.
Are There Any Exceptions to the Medicaid Estate Recovery Program in Tennessee?
Fortunately, the State of Tennessee does provide some exceptions to Medicaid estate recovery. The state may delay or choose not to pursue recovery in the following situations:
- Surviving Spouse: If a Medicaid recipient leaves behind a spouse, the state will not seek recovery until the spouse passes away.
- Minor or Disabled Child: If the deceased has a child under 21, or one who is blind or disabled, estate recovery will not proceed.
- Financial Hardship: Heirs may apply for a hardship waiver if estate recovery would cause an “undue hardship,” defined by Tennessee as existing in the following three circumstances:
- The property of the estate is the sole income-producing asset of the survivors, such as a family farm or other family business.
- A sibling of the deceased individual meets the following criteria:
- He or she was lawfully residing in the individual’s home at least 1 year immediately before the individual’s admission to the medical institution;
- He or she provided care to such individual for that 1 year, which permitted the individual to reside in the home rather than in an institution; and
- He or she has lawfully resided in such home on a continuous basis since the date of the individual’s admission to the medical institution.
- A son or daughter of the individual meets the following criteria:
- He or she was lawfully residing in the individual’s home for at least 2 years immediately before the individual’s admission to the medical institution.
- He or she provided care to such individual for those 2 years, which permitted the individual to reside at home rather than in an institution; and
- He or she has lawfully resided in such home on a continuous basis since the date of the individual’s admission to the medical institution.
How Can You Protect Your Assets?
Incorporating a Medicaid planning component into your comprehensive estate plan is the key to minimizing the impact of Medicaid estate recovery in Tennessee. Placing assets into an irrevocable trust, for example, may shield them from estate recovery if the trust is properly structured and funded at least five years before applying for Medicaid. Gifting assets or transferring home ownership may also offer protection, but these transfers must be carefully planned to avoid Medicaid’s five-year lookback period as well. Working with an experienced estate planning attorney is the best way to ensure that your estate is protected and you qualify for Medicaid (TennCare) if you need it during your retirement years.
Contact a Murfreesboro Estate Planning Attorney
If you have additional questions or concerns about the Tennessee Medicaid Estate Recovery Program, contact an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.
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