Medicaid proves that no program from the government is entirely free. Medicaid beneficiaries living in nursing homes may spend tens of thousands of dollars of the government’s money over the years. After a beneficiary dies, the state takes the person’s assets to repay the benefits. The estate recovery laws that occur in New York include rules and exceptions.
The definition of exempt assets
Separating exempt assets from nonexempt assets is the first step of estate planning. Medicaid estate recovery is the process of recovering the valuable estate of a Medicaid beneficiary after his or her death. The value of the estate is calculated and then used to pay off debts before the person’s belongings are transferred to the heirs.
However, there are exempt assets that a person can keep in his or her possession after death. The definition of an exempt asset varies by state. In New York, assets that are guaranteed to be exempt from Medicaid recovery include household property, personal property and vehicles. Other exemptions include IRA or 401k payouts, burial expenses, life insurance policies, joint bank accounts and other assets owned by both spouses.
Knowing the law is the beginning step
A Medicaid beneficiary who wants to save personal assets has to understand the state’s Medicaid laws. The portions of your estate that are recoverable depend on laws that change over time. A newly passed federal law could reduce or expand the range of assets that are exempt in the Medicaid estate recovery process. In the future, the state could come after your home, so understanding the law is the first step of estate planning.