My MIL is in a nursing home in MO. Can Medicare sue our family farm after she stops being self pay?

When a person goes on Medicaid (not Medicare) the state has the right/obligation to try to recover some of the taxpayer money by taking to proceeds of the person's house after the person's spouse has died.

There are exceptions to this, and one of the exceptions is if doing so would cause others to lose their means of livelihood, such as with a family farm.

Please do not take any steps regarding the deed to the farm without consulting an attorney specializing in Elder Law. You could inadvertently make matters worse by creating a "gift" situation that would interfere with the Medicaid application.

This is important and worth the fee to consult an attorney. I don't think you have to worry, but let a lawyer tell you that!

Medicaid should grant an exemption to a family farm. Your local Grange may be able to help sort this out.

^ It didn't in my friends case. His wife had ALZ and was in a NH, on medicaid. He was able to keep the farm as long as he was alive. Upon his death, his family have had to put it up for sale. But, they knew this from the time that she went into the NH. We are talking IL., in this case. Good luck. You guys can investigate and get the right answer with a few phone calls, I think.

Sassy - this is going to be a bit long……You all should be OK if it truly is a farm. What is going to be involved in all this for your family is how MERP - Medicaid Estate Recovery Program - is managed in your state. Under Medicaid rules since about 2005 / 06 all states have to have some sort of "recoup" or recovery program in place in order for them to get Medicaid funding from the feds. Medicaid is a joint fed & state program (unlike MediCARE which is all federal.) Now Medicaid is administered or managed by each state uniquely, so what flies in OH may be very different than for FL. ALot of this is due to how each state views property rights, probate, death laws, etc.

I'm most familiar with how MERP runs for TX as my mom is in a NH, on Medicaid and still has her home, so this is something I will be likely dealing with and keep up with. Now when your MIL applied for Medicaid, somewhere within the application there was mention of MERP. For TX it is an acknowledgment of participation and you do not sign off of your acceptance on it either. By taking Medicaid, you, by default accept any & all parts of the program, like MERP.

Now just how long she has been on Medicaid may make a difference. If your state was late in putting together MERP and she & you late FIL has been on Medicaid or a long while, she may be grandfathered (or grand mothered!) under the old rules so no MERP for her. So I'd suggest you look into that possibility. But if she is on Medicaid in the past 5 - 6 years, then MERP will be a factor. But I'd look into that.

While she is alive, her homestead & farm is an exempt asset for Medicaid. But upon her death the exemption ceases. What MERP allows for is or a claim or a lien to be placed on any asset of the deceased that is in their estate. The farm will be within her estate. Now whether it is a claim or a lien will be dependent on how your state runs probate & laws on property rights. Like for TX, probate is a level of claim by class situation. It is NOT a lien. MERP for TX is a class 7 claim so rates are somewhat lower as everything in Class 1 - 6 are paid first and you actually open probate. Now if your state is such that all claims are equal that changes the situation. OR if your state allows for a lien to be placed on property, that too changes stuff. TX does not allow for a lien to be placed, it is a claim which in essence clouds the title on the property so until the claim is lifted the property cannot be easily sold or transferred. My point in this is that your state law will make a huge azz difference in what happens. Understand?

Now MERP is required to have all sorts of exemptions, exclusions, hardships, etc.
For TX, a farm or property where a family business exists qualifies for an full exemption from MERP. And the family "farm" can be quite huge, like dozens of sections to make up the "farm" too. Also if the homestead on the farm is not occupied and you all have been paying on any costs to maintain the house, that too will be an exclusion to the MERP tally (this would be for normal stuff like taxes, insurance, etc not for putting in a pool). Now the exemptions, exclusions, etc just do not happen automatically but have to be filed for and with supporting documentation too. How the timeframe runs on all this will again be dependent on just how the frickin' way your state does MERP.

Your state should have somewhere on it's Medicaid website all the details on what MERP is and what exemptions, exclusions, hardships etc are. For TX it is on 3 different sites and also on the TAC - TX Adminstrative Code which is quite helpful to keep up with changes. Google your states program to get the specifics.

Now when she dies, it will trigger for the state Medicaid program to contact MERP to send out a "Notice to File a Claim" or a "letter of intent". Just how & when will depend on your state (again!). The letter or notice will be sent usually to whomever the state has on file for the contact person for the Medicaid recipient. Sometimes it gets sent to the deceased at the NH or could go to the property address. The intent means the intent to file a claim or a lien. The letter is not at all warm & fuzzy, it's more like "we are sorry for the recent death of……Medicaid paid $167,890 for her care that we want reimbursed…unless we hear different we want this repaid ……" The state has to do a cost benefit analysis to determine whether to go forward with it's claim or lien and it is critical that you let them know of your situation. Your response to the letter or notice provides MERP information for them to determine whether or not to proceed. MERP ultimately involves probate and court time & costs, so the state is required to justify proceeding if you file any exclusions, etc that could take away from the anticipated sum. Then the state either reduces the amount by the exclusions or releases the claim or lien if you qualify for an exemption or hardship. Understand? You will have to provide the details on the farm to get this done - & I would imagine you can do this easily. Most of the letters or notices seem to have a very short window to submit all this too - like 30 - 60 days for all documentation to be received. Otherwise the state moves forward and places a claim of lien on the property. This seems to happen quite often too, where family just ignores the letter and then literally they have a claim or lien on the property by default and they could have filed for an exemption and just didn't. Bummer! One real issue I have with all this is that often family is still bereaving and just cannot deal with finding the old deed of trust from 1970 or other items and just do not do the filing or they too are themselves elderly and just do not understand what the letter means.

All states have to do MERP, but many states are now contracting this out. If your state is doing this, it will be a much more like a debt collector situation. By that I mean that you will have an exact time frame to provide the precise documentation needed to deal with MERP & that anything in your favor is not in their best interest. There are 2 companies (PCG & HMS) who do this and make a % of the recovery ( 12.5 - 16%) plus fees for about 1/3 of the states (and growing). It is much more aggressive approach than what state employees would do for recovery.

Now I think if you are good on documentation & very organized, you can do MERP on your own. Now when all settled, you will want to get a form that clearly states the MERP has released it's claim or lien against the estate. TX has a specific form for this, & I imagine most states do also. It will need to be filed in probate in order for the property to transfer to you & your hubby or to ever get clear clean title issued. I would take the approach of doing the MERP paperwork and then running it all by my probate attorney to make sure it was OK before sending it to MERP (and mailing it certified mail with the return registered receipt too). I've been an executrix twice and even after all that, I still will be using a probate attorney for my mom's filings as you just cannot do it all and it is just too important to get it done right. Good luck & get yourself going on finding out what your state does.

Also, you really do NOT want to do anything to change the deed while she is alive. It is an exempt asset as long as it is in her name. It needs to stay that way.

If you change the ownership, it would make MIL totally ineligible for Medicaid and be a total hornets nest of problems….like a transfer penalty, gifting issues, taxes, and heaven knows what else. It is just too late now to do this as it had to have been done 5 years before she applied for Medicaid.