Georgia Medicaid Estate Recovery: Can the State Take the Family Home?

Imagine the funeral is over. The casseroles have stopped arriving. You are finally sitting at your mother’s kitchen table with a box of her papers, and there is a letter from the State of Georgia. It says the Department of Community Health intends to recover what Medicaid paid for her nursing home care.

The number in that letter is often six figures.

Your first thought is the house. It is the one thing she said she wanted the children to have, and now a state agency appears to be claiming it. That fear is real, and I want to be honest with you: sometimes the claim is valid. But it is far more limited than most families believe, and there are protections built into Georgia law that almost nobody tells you about until it is too late.

Here is what estate recovery actually is, what it can reach, and what you can still do.

What Medicaid Estate Recovery Is

Medicaid is not a gift. Federal law requires every state to try to recover, after death, what it spent on long-term care for people aged 55 and older that received institutionalized care or community-based care in the home. Georgia runs its program through the Department of Community Health.

The important thing to realize is what the state is recovering against. It is not coming after your income, your house, or your bank account. It files a claim against the estate of the person who received the benefits.

That single word, estate, is where the whole picture changes.

The Rule Most Families Never Hear

Georgia is considered an “expanded recovery” state for Medicaid Estate Recovery. This means Georgia may try to recover certain Medicaid benefits from more than just the property that goes through probate after a Medicaid recipient dies.

In some states, Medicaid recovery is limited mostly to assets that are part of the person’s probate estate. Georgia uses a broader definition of “estate.” This means the State may also look at certain property that passes outside of probate if the Medicaid recipient still had a legal ownership interest in that property at the time of death.

For example, simply adding another person to a deed, using joint ownership with a right of survivorship, or placing property into a revocable living trust does not always protect that property from Medicaid Estate Recovery. Even if the asset avoids probate, Georgia may still consider whether the Medicaid recipient owned or kept an interest in the property when he or she died.

This is why avoiding probate and avoiding Medicaid Estate Recovery are not the same thing. A revocable living trust may help a family avoid probate, but it generally does not provide the same type of Medicaid asset protection as a properly designed irrevocable asset protection trust.

It is also important to understand that Medicaid Estate Recovery is different from Medicaid’s five-year look-back rule. The five-year look-back focuses on certain transfers made before a person applies for Medicaid. Estate Recovery focuses on what ownership interests the Medicaid recipient still has at death. A planning decision may affect one rule differently from the other.

The key question is not simply, “Will this asset go through probate?” The better question is, “Will the Medicaid recipient still own or have a legal interest in this asset at death?” That is one of the most important questions when planning to protect assets from Medicaid Estate Recovery in Georgia.

What Georgia Cannot Take

There are protections, and they matter.

The state cannot recover while a surviving spouse is living. Recovery is deferred. This is federal law and Georgia follows it.

Recovery is deferred while a child under 21 is living, or a child of any age who is blind or permanently disabled.

There is a hardship waiver. Georgia must have a process for waiving recovery where it would cause undue hardship, and one recognized ground is where the property is the sole income-producing asset of the survivors, such as a family farm or small business.

Year’s Support is a genuine Georgia advantage. This is one of the most powerful and least understood tools in this state. A surviving spouse, or minor children, can petition the probate court to set aside property from the estate for their support. Property properly awarded through Year’s Support passes outside the ordinary claims process, and it can defeat a recovery claim that would otherwise succeed. Most families have never heard of it. The window to file is limited, so this is not something to discover a year later.

Where Families Go Wrong

The mistake I see most often is the well-meaning transfer.

A parent is heading into care. Somebody suggests deeding the house to the children to keep it safe. It feels like the responsible thing to do.

Georgia has a five year look back. Any transfer for less than fair market value inside that window is reviewed when the Medicaid application is filed, and it can create a penalty period during which the applicant is ineligible and the family is paying privately – which for a Skilled Nursing Facility could be anywhere from $8,000.00 to $16,000.00 a month. A transfer made to protect the house can be the very thing that makes the several months unaffordable.

The second mistake is quieter. Families assume that because a will names the children, the house is theirs. A will does not avoid probate. A will is the instruction manual for probate. If the house passes under the will, it is a probate asset, and a probate asset is a prime example of an asset that estate recovery reaches.

What To Do, Depending on Where You Are

If nobody is in care yet, this is the position where the most is possible. Deeds, beneficiary designations, and the right kind of trust can be reviewed and corrected while there is no crisis and no deadline. Planning done now is often planning done outside the look back.

If a parent is entering care now. Do not transfer anything first. Come and talk to somebody before money or property moves. There is more available at the crisis stage than families expect, particularly for married couples, because Georgia’s spousal protections exist precisely for this situation.

If a parent has already died and the letter has arrived. Do not ignore it and do not pay it. There are deadlines on both sides, and there are grounds, including Year’s Support and the hardship waiver, that may apply to your family. This is worth a conversation before anybody writes a check or signs an acknowledgment.

A Word About the House Itself

Families attach enormous meaning to the family home, and rightly so. It is usually the largest asset and always the most emotional one.

What I want you to realize is that protecting it is a titling and timing question far more than it is a money question. The families who keep the house are rarely the ones with the most assets. They are the ones who looked at the deed early enough for the answer to still matter.

This Is Educational, Not Legal Advice

This is being presented for educational purposes only and nothing here should be treated as legal advice. What applies to you is very fact specific to your circumstances. I am licensed in Georgia and Michigan only, and this area of law changes frequently. If you are outside Georgia, take the foundation here and go find a wealth protection attorney in your jurisdiction.

Your Next Step

If a parent is in care, entering care, or has recently died and you have heard from the state, schedule a complimentary 15 minute Strategy Session by calling 404-549-5001. Fifteen minutes is usually enough to tell you whether there is something worth doing and how quickly it needs to happen.

Our weekly webinar runs every Thursday at 1pm, with a different topic each week.

You can also read more about how we approach this on our Medicaid Planning and Asset Protection Planning pages.

The three things to carry with you: estate recovery reaches the probate estate, not everything your parent owned; Georgia has real protections including Year’s Support and the hardship waiver; and the single most expensive thing you can do is transfer property without advice first.

You are not the first family to open that letter, and you do not have to work out what it means on your own.

why this disclosure in a blog? while i do give the disclosure at live events, I have never included it in my blogs. If we decide to include then it would make more sense to be towards the beginning

   

Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!