Medicaid Is Forcing You To Sell Your Family's Home

by Robin Carter, Broker Associate

Medicaid is a government program that provides health insurance for people who have limited income and assets. It can be a good program for seniors, but it also has some serious drawbacks. One of these drawbacks is the fact that Medicaid liens can be filed against homes owned by Medicaid recipients without their knowledge—or even without their involvement in a transaction! In this article, we'll look at how these liens work and what you can do to protect yourself from them as either a buyer or seller of property.

How Does A Medicaid Lien Work?

A lien is a claim against a property. It can be filed against your home if you are being sued for debt and the court grants the creditor permission to put a lien on it.
In this case, Medicaid is acting as that creditor: they're suing you for medical bills. If they win, they'll get their money from selling off your house after it's been foreclosed upon (or through another means).

Who Does MERP Apply To In NJ?

Medicaid Estate Recovery Program (MERP) is a federally mandated initiative that aims to recover the costs of certain Medicaid services provided to beneficiaries from their estates after they pass away. This program helps ensure that Medicaid remains financially sustainable for future generations in need.

In New Jersey, estate recovery is applicable to Medicaid beneficiaries who are 55 years of age or older and have received specific types of Medicaid services. These services include nursing facility services, home and community-based services, and related hospital and prescription drug services. However, it's important to note that states may recover costs for any medical care covered by Medicaid, not just the cost of long-term care.
To sum up, the Medicaid Estate Recovery Program in New Jersey is designed to recoup the costs of certain Medicaid services provided to eligible beneficiaries after their death. This program helps maintain the financial viability of Medicaid, ensuring that it continues to provide essential healthcare services to those in need.

Exemptions

In New Jersey, the Medicaid Estate Recovery Program (MERP) has certain exemptions and situations where recovery efforts may be waived or delayed. According to the New Jersey Department of Human Services, estate recovery is deferred if there is a surviving spouse or a surviving child under the age of 21, or a child of any age who is blind or permanently disabled[^1^].

It is important to consult with a local attorney or Medicaid expert to understand the specific exemptions and rules that apply in New Jersey, as the information provided does not cover all possible exemptions. Here are a few possibilities;

1. Surviving Spouse: If the Medicaid recipient has a surviving spouse, estate recovery is typically deferred until the spouse passes away.

2. Minor Children: Estate recovery is usually postponed if the deceased Medicaid recipient has a surviving child under the age of 21, or a child of any age who is blind or permanently disabled.

3. Undue Hardship: If estate recovery would cause an undue hardship on the heirs or survivors, states may waive or reduce the amount to be recovered. Undue hardship typically involves situations where the estate is the primary source of income or the primary residence of the surviving family members.

4. Sibling or Caretaker Child Exception: In some states, if a sibling with an equity interest in the property has lived in the home for at least one year before the Medicaid recipient's institutionalization, or if an adult child has lived in the home for at least two years and provided care that delayed the recipient's need for nursing home care, estate recovery may be waived.

5. Estate Recovery Amounts Less Than Administrative Costs: If the cost of pursuing estate recovery exceeds the amount that would be recovered, some states may choose not to pursue the recovery.

When Can The State File A Lien Against A Home?

When can the state file a lien against a home?

• When it's sold, or
• When it's refinanced, or
• When it's foreclosed on.

How Are The Owners Who Are Affected By The Medicaid Lien Notified?

The state can't just go around putting liens on people's homes without notifying them. The notice must be sent to all parties involved, including:

• The owner
• The agent who represented them in the sale or purchase of their home
• Any real estate broker who helped facilitate the transaction by providing advice or other services related to financing, appraisal and marketing of property (this includes sellers)

In addition, if you bought your house from someone else who was receiving Medicaid benefits at the time of sale or transfer (or if they still live there), then both you and that person must receive a copy as well!

How Can You Protect Yourself From A Medicaid Lien?

If you're thinking about buying a home that's been foreclosed on by the bank, there are some things to consider.
First, ask your realtor if there are any liens on the property. If so, try to find out who owns the lien and why they haven't paid off their debt yet (if they can't pay off their debt). You may have to pay more than what you'd like in order for them to get rid of it--but if they won't budge on price or offer anything else valuable in exchange for taking care of this outstanding bill, then walk away from the deal altogether because it isn't worth it!
If there is no record of any liens against this property already filed in court records at the time when the buyer purchases the home but later finds out about one after closing escrows then the buyer should consult an attorney immediately so as not to lose the title through foreclosure process without receiving notice from lender(s) responsible for filing said lien(s).

When To Get A Realtor Involved

When considering a Medicaid sale, it is essential to involve a real estate agent early in the process to ensure that the property is sold at its fair market value. A realtor can help navigate the complexities of Medicaid regulations and provide valuable advice on how to maximize the sale price while remaining compliant with Medicaid rules. Additionally, a real estate agent can assist with marketing the property and negotiating with potential buyers to achieve the best possible outcome.

Even if selling the property is not an option at the moment, it's always great to establish a professional relationship with one. Keeping a Realtor at your fingertips will also give you an idea of how well you can trust their ability to assist you or even provide you with the comfort of knowing they have your best interest in mind should you need their guidance and assistance. Getting a Realtor involved early gives you a chance to fully see their intentions and handling of your specific needs.

It is important to note that Medicaid may need to approve the sale of the property, so involving a real estate agent early on can help expedite this process and avoid potential delays.

Conclusion

We hope that this article has helped you understand how a Medicaid lien can affect your property. If you are planning on selling or buying a home and want to protect yourself from this issue, then I recommend contacting an attorney who specializes in real estate law and contacting myself to help navigate a forced sale in the most gentle way if it's too late.

Feel free to contact me for further assistance. - Robin Carter