Danger ahead? An update on expanded estate recovery in Pennsylvania
After years of following bad legislation, I became convinced that, if government wanted to eliminate property rights, it would do it through the annual budget or by tucking the provision in some obscure regulation. This means that citizens have to be alert to these drastic changes and be ready to oppose them.
A few weeks ago, I wrote about House Bill 1351, Section 1412. See “The Worst Law For Seniors Is Introduced Through Pennsylvania Budget,” May 11, 2009, www.collitonlaw.com/09/051109/htm.
The bill is part of Gov. Rendell’s budget and was introduced by Rep. Dwight Evans, D-Philadelphia, chairman of the House Appropriations Committee. It will be up for passage this month.
If adopted, Pennsylvania would become an “expanded estate recovery” state. Expanded estate recovery would adversely affect seniors, their spouses, children, business associates and joint property owners.
As stated by the experts from https://kellibrindley.com site, It ignores hundreds of years of laws upholding property rights and, by changing the rules as to what belongs to the decedent at time of death, gives the government a preferred position over any other creditor when a recipient of Medicaid benefits dies.
Probably the worst effect of the proposed change is that many husbands and wives dealing with long-term care would, on their spouse’s death, see the government place a lien against them that could be as high as one-half of their home’s value.
One problem in getting the idea across is that many do not realize they will be affected.
As one attorney friend of mine said, “Just don’t go on Medicaid.” This is more easily said than done.
With chronic illness and the cost of skilled nursing care in our area at about $100,000 per year, average people are affected.
Estate recovery is what the government does when a Medicaid recipient dies if he was older than 55 years when he started to receive benefits. Younger people do not have to pay back.
Estate recovery is the government’s attempt to wrench from seniors the proverbial “blood from a stone.” Current procedures are not cost-effective and expanding them would be disastrous. Here is why.
Why estate recovery now is not cost-effective. Medicaid kicks in when the government has decided that the applicant’s assets are low enough to fall even with or below the minimum guidelines.
The government then monitors to make sure that the applicant has not received more, as in inheriting money or winning the lottery. The Commonwealth has decided
that the recipient, with few exceptions, is and continues to be broke. It does not take an economist to figure out that this is not the place to go to get money.
Exceptions include a burial reserve, a house if there is one left in his name, and possibly a bank or PNA account. Special rules cover spouses so they can keep some assets and do not have to get divorced to see their spouse receive care.
What our office often does now under the “kinder, gentler” estate recovery, among other things, is discuss with the Division of Third Party Liability, the Pennsylvania estate recovery unit, the resolution of funerals and bank accounts.
This is how bad it can get. Under current rules, prepaid burial accounts take precedence over estate recovery. Every dollar wrested from a funeral potentially could increase the government claim so funeral expenses are challenged.
One of the most extreme is our “banana” case. A client who chose to buy groceries at a supermarket instead of taking her family out to lunch after her father’s funeral, a traditional expense included in burial reserves, was challenged for the grocery receipts.
“The government will not pay for the bananas” was the statement received from the government employee.
The government was not paying for anything. The burial reserve had been paid by the decedent. Bananas are not going to make a difference to Pennsylvania’s overall expense.
What expanded estate recovery would do. Expanded estate recovery would claim every asset in which the decedent had any interest, even a partial interest, at the time of death and some in which he did not.
A joint property owner who ordinarily would inherit the full interest in a property at time of death would have the government as creditor for half the amount. A term life insurance beneficiary would have the government as the beneficiary of the life insurance.
Expanded estate recovery is a mistake and should be challenged. This would have to be done soon to avoid passage by the Pennsylvania Legislature as part of the budget.
About the Author Janet Colliton
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.