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"Hidden Assets" Recovery – Nebraska Medicaid

On May 16, 2017, the Nebraska Legislature passed L.B. 268 that expands asset recovery for Medicaid beneficiaries.  Under the new bill, the definition of "estate" will now include any real estate, personal property, or other assets in which a Medicaid beneficiary had any legal title or interest, at or just prior to death, including insurance policies and annuities (unless paid for by someone other than the Medicaid beneficiary or his or her spouse), securities, bank accounts, intellectual property rights, contractual or lease rights, or other similar assets.  Assets that are excluded from recovery include insurance proceeds or trust accounts meant for funeral and burial expenses, conveyances of real estate made prior to the effective date of the Act that are subject to a life estate, and any pension rights to the extent they are exempt from Medicaid recovery claims under federal law.

Prior state law only allowed recovery of assets from probate estates, which limited the state's ability to recoup non-probated and transferred assets.  The bill was introduced by Senator Paul Schumacher, who stated when speaking in support of the bill:  "If you have money, it should first go to paying your bills at the nursing home.  Only after those bills are paid, should it go to the heirs."  The Legislature believes that the bill will help to increase collections by approximately $4 million per year, which is a 20 percent  increase from current levels.  This estimate was based on a similar asset recovery program that was implemented in Iowa.

Under L.B. 268, a Medicaid applicant will be required to disclose any interests in real estate, trusts, corporations, limited liability corporations, or other entities, and any income from those interests when applying for Medicaid benefits.  When assets are obtained after an individual first qualifies for Medicaid, they must be disclosed during any subsequent Medicaid eligibility review.  If a person willfully does not disclose an item, any Medicaid assistance that was received  would be subject to recovery by the state.  In addition, the bill targets "sham" transfers of property or assets from a Medicaid beneficiary to a family member that are not commercially reasonable when compared to market rates and prices negotiated in arms' length transactions.  If a transaction is challenged, the burden of proof in such cases rests on the Medicaid beneficiary.  However, the bill does allow a Medicaid recipient or the heirs to appeal a determination that an asset was transferred at below market value.

In addition, the bill would consider an entity to be "related" to the beneficiary if it is controlled by individuals to whom the beneficiary is related or if it is an irrevocable trust under which a relative is a beneficiary, although it expressly excludes situations where that beneficiary is a spouse, a child under the age of 21, or any child who is blind or totally and permanently disabled.  There are also several other provisions dealing with the transfer of real estate and the ability of the Nebraska Department of Health and Human Services ("DHHS") to file a lien for current and future Medicaid benefit expenditure amounts.  Unless a transfer of real estate prior to the effective date of L.B. 268 was includable in the estate of a Medicaid beneficiary under the prior definition of estate, the interest will not be considered part of a Medicaid beneficiary's estate under L.B. 268, unless required disclosures were not made at the time of a beneficiary's initial application for Medicaid or any later review of eligibility for Medicaid.  The bill authorizes DHHS to file a lawsuit against the estate of a Medicaid beneficiary to recover illegally obtained Medicaid benefits, as long as the lawsuit is filed before five years after the death of both the Medicaid beneficiary and the Medicaid beneficiary's spouse, if any.

An interesting provision of the bill that will be helpful to providers gives them the authority to apply for Medicaid on behalf of a person they are treating if the patient is unconscious or otherwise unable to apply and does not have an existing power of attorney or court-appointed individual that can apply on the patient's behalf.

The bill was passed by a 37-11 vote and was approved by Governor Ricketts on May 22,  2017.

Kimberly A. Lammers

 

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