Anthony J. Enea Medicare and Medicaid Law Blog on Lawyers.com

         
                 0;                 Medicaid Performs Kabuki Dance

                &# 160;                        Regarding Estate Recovery
Regulations

                &# 160;                                  0;                &# 160;   By:  Anthony J. Enea, Esq.

     On December
6, 2011, to the dismay of many elder law attorneys, Medicaid allowed the
emergency regulation which expanded the definition of “estate” for recovery of
Medicaid properly paid to expire.  In
both the September and December 2011 edition of this newsletter, there are two
articles I have authored about the proposed regulations, and their significant
impact upon seniors, the disabled and their families. 

     As
of the date of this writing, being, January 9, 2012, Medicaid has advised all
of its districts that, effective immediately, they cannot include assets that
pass outside of the probate estate as part of the decedent’s estate for
recovery purposes, and that a “revised regulation” will be promulgated.  Medicaid has also advised its districts that
the method of use in evaluating life estate interests under the transfer of
assets’ provisions contained in the emergency regulations that expired will
continue to apply.  (See General
Information System Memorandum 11 MA 1028 dated 12/12/11).

     The
new proposed draft regulation amends the prior emergency regulation and §360-7.11
of the Social Services Law (“SSL”) in several significant ways:

          1.   With respect to the effective date of the
proposed regulation, the new definition of “estate” for purposes of Medicaid
recovery will only affect the estates of persons dying on or after July 1,
2012;

          2.   With respect to the exclusive definition of
property affected, they have clarified §360-7.11(a)(2) of the SSL to
provide that the “Interest in property immediately prior to death means the
value (deleting the word “includes”).....” (emphasis added);

          3.   With respect to jointly owned property
defined in §360-7.11(a)(2)(iv) of the SSL, they have
clarified that it is

“the persons per capita share
of jointly owned money market accounts, time deposits, and stocks, bonds and
securities, including but not limited to mutual fund shares, corporate,
municipal and government bonds, U.S. savings bonds and zero coupon bonds”
(emphasis added);

          4.   With respect to Totten Trusts they have
modified §360-7.11(a)(2)(v)of the SSL to clarify
that “... the principal and accumulated interest of a revocable trust,
including a “Totten Trust” is subject to estate recovery;

          5.   With respect to IRA’s and retirement accounts
they  have modified §360-7.11(a)(2)(viii)
of the SSL by providing that “the amount the person could have withdrawn
from an individual retirement account or other retirement fund, taking into
account any penalty for early withdrawal.” 
Thus, it now appears that Medicaid intends to target IRA’s and other
retirement funds for estate recovery purposes. 
Whereas, under the emergency regulation that expired it was merely an
unstated possibility;

          6.   With respect to effective date of their lien,
they have modified §360-7.11(b)(2) of the SSL to provide that “Liens
shall be imposed on property and assets described in subparagraph (ii) of
paragraph (1) of subdivision (a) of this section as soon as practicable after
the person’s death.  Liens asserted against
real property, including cooperative apartments, will be effective upon the
filing of a notice of lien in the office of the clerk of the county in which
such property is located”;

          7.   With respect to Medicaid’s notice of claim,
they have amended §360-7.11(b)(2) of the SSL to provide that “the
Medicaid program will provide a written notice of claim to the estate
fiduciary, if applicable, and to individuals in possession of property
described in subparagraph (ii) of paragraph (1) of subdivision (a) of this
section.   The Medicaid program will file
the notice of claim within the time frame required by the Surrogate’s Court
Procedure Act, or in the case of property described in subparagraph (ii) of
paragraph (1) of subdivision (a) of this section, within seven months of
receiving notification of the death of the person who received Medicaid or the
surviving spouse of such person.”

As the
proposed regulation is presently in a comments period, and the Elder Law
Section, the Real Property Law Section and the Trusts and Estates Law Section of
the New York State Bar Association have collaborated in issuing a Memorandum,
dated January 6, 2012, to Medicaid delineating their many concerns with the
proposed regulation, it is highly uncertain as to whether or not further
modifications to the proposed regulation will be made. 

There are
some positive aspects to the changes made in the proposed regulation,
particularly delaying its effective date to estates of decedents’ dying after
July 1, 2012 and the other changes made which clarify various provisions in the
regulations.  However, there remains many
significant and troubling concerns with the proposed regulation, such as its
retroactive effect and impact upon interests that have already vested, such as
the remainder interest in real property despite language in its enabling
statute preventing same.  The proposed
regulation also has a detrimental impact upon spousal claims, retirement plans
and annuities.

    In the
weeks and months between January and July of 2012, I am confident there will be
more news on the proposed regulations that I will of course report to you.  I don’t believe it is a matter that we will
reach any degree of finality in the near future.

     Anthony J. Enea, Esq. is the
managing member of the firm of Enea, Scanlan & Sirignano, LLP of White
Plains, New York.  His office is
centrally located in White Plains and he has an office in Somers, New York.  

      Mr. Enea is the Chair of the Elder Law Section of the New
York State Bar Association.

      Mr. Enea is a Past President and a Founding Member of the
New York Chapter of the National Academy of Elder Law Attorneys (NAELA).  He is also a member of the Council of
Advanced Practitioners of NAELA.

       Mr. Enea focuses his practice on Elder Law, Wills Trusts
and Estates, Business Succession Planning, Partnership and Corporate Matters.

        He can be reached at (914) 948-1500.