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DENVER, CO   Many years ago, individuals who qualified for Medicaid were not allowed to own property. Over the years, the state and federal government have changed those regulations. Today individuals or couples who own their own home may be eligible for Medicaid if they are in need of nursing home care.

The Medicaid Estate Recovery Act, is a federally mandated program designed to help the State of Colorado to recover all Medicaid costs from the estates of individuals who own property and who receive Medicaid. All payments made by Medicaid including: provider reimbursement and cost sharing for Medicare and private insurance coverages (Part B Medicare premiums, co-insurance or co-payments for Medicare services, and deductibles for Medicare Part A and B) may be recovered.

The estates of nursing facility residents or persons who receive Medicaid after age 55 are affected. Those recipients residing in a nursing facility or age 65 on or after July 1, 1992 may have costs recovered from that date. Effective July 1, 1994, recipients over age 55 are included in the program with recovery of costs incurred on or after July 1, 1994.

The following estates (homes or other real property) are exempt:

a) if the individual is survived by the spouse, a child under 21, or a blind or disabled dependent;
b) if there is a brother or sister who lived in the home for at least a year before the individual went to a nursing home and has lived there continuously since; or
c) if a son or daughter lived in the house for at least two years before the deceased entered a nursing home, thus allowing the parent to delay entry into a nursing home, and if the son or daughter has continued to live in the home since the parent entered a nursing home.

The individual does not have to sell their home. However, a lien may be placed on the home during the time that Medicaid benefits are received by a Medicaid recipient.

A lien will be placed on the personal and real property when all of the following conditions are met:

a) the recipient lives in a nursing facility;
b) the recipient owns a home or other real property;
c) the State determines that a nursing facility resident is not likely to return home (this decision is made by the Options for Long Term Care Agency). For a list of agencies. The recipient or the personal representative is notified of the decision and can appeal it);
d) the nursing facility resident does not have a spouse, child under age 21, or blind or disabled dependent who is living in the home; and
e) the recipient does not have a brother or sister who is part owner of the home and who has lived in the home continuously since at least one year before nursing facility entry.

The lien is not exercised until the property is sold and/or the individual dies. The State files a claim against the estate of the deceased medical assistance recipient. The estate includes all of the property (personal and real) that is left when a recipient dies. The personal representative handling the estate uses the money from the sale of the property to pay the State for the costs of medical care that have been provided.

A lien can be eliminated in one of the following ways:
a) if the nursing facility resident is discharged and returns home to live, the State will dissolve any lien it has on the recipient's home or other property within 30 days;
b) if the heirs can prove hardship, they can have the lien waived; or
c) if the heirs pay the amount of money owed to the State for the lien, they can keep the property.

Individuals who established a life estate on their property prior to July 1, 1995 can not have a lien placed on the property. For individuals who establish a life estate after July 1, 1995, a portion of the life estate is considered a transfer without fair consideration and a lien can be placed on that share of the property. If the property is owned in joint tenancy, with a spouse only, it is presumed that the State can not place a lien on the property, under current law.

Individuals who are single or widowed and who own their own home, may want to seek legal counsel prior to entering a nursing home with Medicaid benefits to understand how the Medicaid Estate Recovery Act may affect their real property.