This chapter describes the requirements, limitations, and procedures that apply when the department recovers the cost of medical care from the estate of a deceased client and when the department files liens prior to the client's death.
"Contract health service delivery area (CHSDA)" means the geographic area within which contract health services will be made available by the Indian Health Service to members of an identified Indian community who reside in the area as identified in 42 C.F.R. Sec. 136.21(d) and 136.22.
"Estate" means all property and any other assets that pass upon the client's death under the client's will or by intestate succession pursuant to chapter 11.04 RCW or under chapter 11.62 RCW. The value of the estate will be reduced by any valid liability against the decedent's property at the time of death. An estate also includes:
For a client who died after June 30, 1995 and before July 27, 1997, nonprobate assets as defined by RCW 11.02.005, except property passing through a community property agreement; or
For a client who died after July 26, 1997 and before September 14, 2006, nonprobate assets as defined by RCW 11.02.005.
For a client who died on or after September 14, 2006, nonprobate assets as defined by RCW 11.02.005 and any life estate interest held by the recipient immediately before death.
"Heir" means the decedent's surviving spouse and children (natural and adopted); or those persons who are entitled to inherit the decedent's property under a will properly executed under RCW 11.12.020 and accepted by the probate court as a valid will.
"Joint tenancy" means ownership of property held under circumstances that entitle one or more owners to the whole of the property on the death of the other owner(s), including, but not limited to, joint tenancy with right of survivorship.
"Life estate" means an ownership interest in a property only during the lifetime of the person(s) owning the life estate. In some cases, the ownership interest lasts only until the occurrence of some specific event, such as remarriage of the life estate owner. A life estate owner may not have the legal title or deed to the property, but may have rights to possession, use, income and/or selling their life estate interest in the property.
"Lis pendens" means a notice filed in public records warning that title to certain real property is in litigation and the outcome of the litigation may affect the title.
"Long-term care services" means, for the purposes of this chapter only, the services administered directly or through contract by the department of social and health services for clients of the home and community services division and division of developmental disabilities including, but not limited to, nursing facility care and home and community services.
"Medicaid" means the state and federally funded program that provides medical services under Title XIX of the Federal Social Security Act.
"Medical assistance" means both Medicaid and medical care services.
"Medicare Savings programs" means the programs described in WAC 388-517-0300 that help a client pay some of the costs that Medicare does not cover.
"Property": Examples include, but are not limited to, personal property, real property, title property, and trust property as described below:
"Personal property" means any property that is not classified as real, title, or trust property in the definitions provided here;
"Qualified individual" means an heir or an unmarried individual who, immediately prior to the client's death, was eighteen years of age or older, shared the same regular and permanent residence with the client and with whom the client had an exclusive relationship of mutual support, caring, and commitment.
"Real property" means land and anything growing on, attached to, or erected thereon;
"Title property" means, for the purposes of this chapter only, property with a title such as motor homes, mobile homes, boats, motorcycles, and vehicles.
"Trust property" means any type of property interest titled in, or held by, a trustee for the benefit of another person or entity.
"State-only funded long-term care" means the long-term care services that are financed with state funds only.
The client's estate is not liable for services provided before July 26, 1987.
The client's estate is not liable when the client died before July 1, 1994 and on the date of death there was:
A surviving spouse; or
A surviving child who was either:
Under twenty-one years of age; or
Blind or disabled as defined under chapter 388-511 WAC.
The estate of a frail elder or vulnerable adult under RCW 74.34.005 is not liable for the cost of adult protective services (APS) financed with state funds only.
The client's estate is not liable for amounts paid for Medicare premiums and other cost-sharing expenses incurred on behalf of a client who is eligible only for the Medicare Savings programs, and not otherwise Medicaid eligible.
ESTATE RECOVERY AND LIENS ESTABLISHED PRIOR TO DEATH FOR RECOVERY OF LONG-TERM CARE AND MEDICAL SERVICES
ESTATE RECOVERY
The State of Washington's Estate Recovery Program was enacted July 26, 1987. In 1993, federal law mandated that all states enact Estate Recovery programs. State and federal law mandate the State of Washington's estate recovery program. Recovery of the cost of services and the age when recovery applies has changed several times since the program was enacted. The department recovers from estates according to the estate recovery law in effect at the time the services were received.
Service Costs Subject to Estate Recovery
Services provided from 7/26/87 through 6/30/94:
The cost of all Medicaid services provided for the client's care from age 65, or after 7/26/87 (whichever is later), through 6/30/94. This includes services paid through the client's Medical Identification card plus waiver services and nursing facility care.
Services provided from 7/1/94 through 6/30/95:
Only the cost of the following Medicaid services, not all medical assistance and services:
Nursing facility services
COPES
Traumatic Brain Injury - TBI
Community Alternatives Program - CAP (DDD program)
Outward Bound Residential Alternatives - OBRA (DDD program)
Coordinated Community Aids Service Alternatives - CASA (MAA program)
Hospital and prescription drug services related to services listed above
Services provided from 7/1/95 through 5/31/04:
Only the cost of the following services, not all medical assistance and services:
Nursing facility services
COPES
Traumatic Brain Injury - TBI
Community Alternatives Program - CAP (DDD program)
Outward Bound Residential Alternatives - OBRA (DDD program)
Coordinated Community Aids Service Alternatives - CASA (MAA program)
Medicaid Personal Care
Adult Day Health
Private Duty Nursing administered by AASA
State-funded long-term care services (administered by ADSA)
(Chore services, Adult Family Home, Adult Residential Care)
Hospital and prescription drug services related to services listed above
Services provided as of 6/1/04
All Medicaid services, premium payments to managed care organizations, and Medicare cost-sharing services and Medicare premiums for individuals also receiving Medicaid. This includes long-term care services.
Estate recovery does not apply to individuals who only receive benefits from a Medicare Savings Program.
All state-funded long-term care services and related hospital and prescription drug services administered by ADSA and DDD.
NOTE:
Medicaid services are federally funded services and include Family related CN, SSI related CN/MN and GA-X.
Age When Recovery Applies
Prior to 7/1/94:
Age 65 for Medicaid services
From 7/1/94 to 6/30/95:
Age 55 for Medicaid services
As of 7/1/95:
Age 55 for Medicaid long term care services
At any age for state funded long term care services
Services Exempt from Recovery
Services received prior to 7/26/87, when the Estate Recovery Program was enacted
Adult protective services provided to a frail elder or vulnerable adult and paid for only by state funds
Medicare premiums and other services received under a Medicare Savings Program if the client was eligible only for assistance under a Medicare Savings Program (such as QMB or SLMB) and not for any other Medicaid program.
Assets Not Subject to Recovery
Certain properties belonging to American Indians/Alaska natives (explained in WAC 388-527-2754)
Government reparation payments specifically excluded by federal law as long as such funds have been kept segregated and not commingled with other countable resources and remain identifiable.
Recovery Process
The Office of Financial Recovery (OFR) administers Estate Recovery collections for the Department of Social and Health Services (DSHS). OFR collects approximately $17 million per year to offset payments made by the State for medical services.
DSHS recovers from the estate of a deceased client. "Estate" includes all real property (land or buildings) and all other property (mobile homes, vehicles, savings, other assets) the client owned or had an interest in when the client died. Estate may also include certain other property interests an individual had immediately before death. These include a joint interest or a life estate in a house or land.
A home transferred to a spouse or to a minor, blind or disabled child prior to the client's death, is not considered part of the client's estate.
DSHS recovers from estates according to the estate recovery law in effect at the time the services were received.
DSHS defers recovery:
While there is a surviving child, who is under 21 years of age, blind or disabled.
Until the death of a surviving spouse (if any). When the surviving spouse dies, recovery action will be taken against property in which the deceased client had an interest in at the time of death.
If the estate subject to adjustment or recovery is the sole income-producing asset of one or more qualified individuals and income is limited; or the department determines that recovery would cause an undue hardship for a qualified individual(s). Qualified individual means an heir or an unmarried individual who, immediately prior to the client's death, was eighteen years of age or older, shared the same regular and permanent residence with the client and with whom the client had an exclusive relationship of mutual support, caring, and commitment. A request for a hardship waiver must be made in writing to the Office of Financial Recovery and each request is reviewed on its own merits. If the request is denied, the decision may be appealed through the Administrative Hearing process.
DSHS will file a lien or make a claim against property that is included in the deceased client's estate. Prior to filing a lien against real or titled property, the department gives notice and an opportunity for a hearing to the probate estate's personal representative, if any, or any other person known to have title to the affected property. Liens placed through the Estate Recovery process are valid for 20 years.
LIENS ESTABLISHED PRIOR TO DEATH FOR RECOVERY OF MEDICAL SERVICES AND LONG-TERM CARE
Recent legislative changes gave DSHS the authority to file a lien against the property of a medical assistance client who is permanently institutionalized in a nursing facility or other medical institution prior to his or her death. The department will recover the costs of long-term care and medical services paid from the client's estate or sale of the property. If the client is discharged from the medical institution and returns home, the department releases the lien. No lien will be filed if one or more of the following persons are lawfully residing in the home:
The individual's spouse;
The individual's child who is under twenty-one years of age or blind or disabled according to Social Security criteria;
The individual's sibling who has an equity interest in the home and resided in the property for at least one year prior to the date of the individual's admission to the medical institution.
The department can recover the medical expenditures without regard to the age of the client.
WORKER RESPONSIBILITIES
The Department is required to notify all potential Medicaid applicants and Medicaid recipients about the Estate Recovery provisions. The required notification is included in the current DSHS Application for Benefits form and the client's signature acknowledges receipt of the required notice. At eligibility review, staff need to provide Medicaid recipients with notice of their Rights & Responsibilities as this also includes language explaining Estate Recovery.
Workers are required to enter information regarding all assets and resources owned by the Medicaid client to the ACES system including assets which are exempt for the purposes of eligibility. Recent policy changes following the 2005 Deficit Reduction Act (DRA) require all primary residence information and current market value be indicated in ACES since home equity is an eligibility factor for long term care services. A client may be ineligible for some long term care services if the equity in their primary residence exceeds the limit set in WAC 388-513-1350.
For non-institutional medical programs, home equity is not an eligibility factor. It is not necessary to get verification of the equity value of the primary residence. Workers may determine fair market value using any reasonable method such as local Assessor's office website, client statement, current market appraisal or other internet resources such as Zillow.com. A current mortgage statement may be used to establish encumbrances but is not required. HCS staff and CSD staff who process long term care programs such as HCS/DDD waivers or nursing home cases will need to request accurate verification of fair market value and encumbrances to support the Excess Home equity provisions of the DRA.
If staff discovers that an asset, or part of an asset, has been transferred out of the client's name, the worker needs to review the case and determine the effect of the transfer on eligibility. Some transfers prevent the client from being eligible to receive long term care services and require that the case be terminated, giving advance and adequate notice, and a period of ineligibility be established. OFR may discover transfers by clients in their review of county records and will notify the financial worker.
Annuities and some trusts owned by Medicaid clients need to list the State as the beneficiary of any assets remaining in the trust upon the death of the client in order to qualify for Medicaid benefits. Information regarding Trusts is found in WAC 388-561-0100. Information on Annuities is found in WAC 388-561-0200.
Workers need to ensure that a complete copy of the terms of the trust or annuity is placed in the client's record and a copy is sent to the Office of Financial Recovery (OFR).
Offices with DMS access may forward a copy of the trust document to Kenneth Washington at OFR or mail a copy to the following address:
Office of Financial Recovery,
PO Box 9501,
Olympia, WA 98507-9501.
The telephone number for the Office of Financial Recovery is 1(800) 562-6114.
The following information sheets may be useful to staff and may be given out to clients who request more information on Estate Recovery.
