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Medicaid Clawback Exemption

Posted on September 19, 2023 in asset protection

The estate of a Medicaid recipient is generally obligated to repay Medicaid for the benefits the decedent received during their lifetime. This is sometimes referred to as Medicaid Clawback. Put more simply, Medicaid wants to be reimbursed for the benefits it paid to beneficiaries. There are exceptions, however.

When a person makes an application for Medicaid, the applicant must provide a list of their available assets. If the applicant has too many assets, they will be disqualified from receiving Medicaid benefits until the assets fall below established thresholds. The main reason for this is that Medicaid is designed for those in need, so benefits are not for those who can financially provide for themselves.

Once a person qualifies and begins to receive Medicaid benefits, they can continue to receive benefits so long as their available assets remain sufficiently low.

One asset that does not disqualify a Medicaid applicant or recipient is a home so long as the owner/recipient indicates that they intend to return to the home from a nursing home or similar care facility, even if this scenario seems highly unlikely. If, however, the Medicaid recipient passes away before returning home, Medicaid can look to the proceeds from the sale of the home for reimbursement of the benefits paid on behalf of the decedent.

One exception is something referred to as the  sibling exemption.’  Under this exception, if two or more siblings reside in a home and the Medicaid applicant and their sibling has lived in the home for at least one year, and the sibling is on the title to the home and has been paying some of the expenses of the home the Medicaid applicant can the sibling without concern that Medicaid will seek reimbursement when the home is ultimately sold.