New York Passed and Then Repealed Medicaid Expanded Estate Recovery: A Recap


What is "estate recovery"?

When a Medicaid beneficiary dies, Medicaid may ask its estate for reimbursement of the benefits paid on its behalf. This is known as "succession recovery". Each state has rules specifying how and to what extent such recovery is possible.

Historically, limited estate recovery in New York to check assets

Until 2011, New York limited this recovery to the Medicaid beneficiary. approval assets – that is, only assets that are titrated only to the proper name of the Medicaid recipient. Other assets – including assets held jointly with another person, a "life estate" reserved in an instrument and assets held in revocable and irrevocable trusts – were excluded from the collection of the estate.

New rules and regulations expand estate recovery

On April 1, 2011, New York adopted "extended" rules for the collection of estates (1). These new rules were submitted to the regulations that were to be adopted by the New York State Department of Health. On September 8, 2011, the Ministry of Health finally adopted these much-awaited regulations (2). The regulations have been promulgated as "Emergency Regulations" on an expedited basis, with an integrated expiry date if they are not extended or otherwise converted into permanent regulations. then, on September 26, 2011, an administrative directive was issued by the New York State Department of Health to clarify the scope of regulation (3).

These new rules and regulations have broadened the definition of "inheritance" to include specifically as assets subject to inheritance recovery the property of the deceased "through joint tenancy, joint tenancy, survival, succession life, the interest of the deceased in the property immediately before the death "(emphasis added). The expansion in these asset classes and the explicit wording "immediately before death" were very significant. As explained below, they were also very disturbing.

For example, a very popular planning tool is the use of a home range in an act for the principal residence. This is a powerful tool because it accomplishes a number of things, including: (1) it removes the property from the name of the Medicaid Applicant; and (2) the estate estate ensures that the real estate tax base is "increased" to fair market value upon the death of the Medicaid beneficiary, saving tens of thousands – even hundreds of thousands – of capital earns taxes when the Medicaid beneficiary dies. As you can imagine, the act of succession – which is relatively easy, quick and inexpensive to implement – has been very popular and widely used as a planning tool.

In New York, the theory was: a vital property extinguishes at the moment of death, so Medicaid has no way to create a lien on the prosecution of the deceased or sue accordingly. But once the definition was expanded to include life domains and life estate value "immediately before death," Medicaid intended to continue its recovery action against the life estate. Therefore, while before the critical calculation was the value of the life estate based on the life expectancy of the recipient at the time of the transfer of the act, the main concern now is the recoverable amount, which is the age-based value of the Medicaid recipient just before the moment of death.

Problems with the new rules and their application

From the beginning, the new rules were opposed for constitutional and legal reasons. In fact, the bar of New York State has taken legal action challenging them. Among the problems with the new rules:

1. There was no clear date of entry into force or acquired rights. Children whose property had been ceded by their parents several years ago could have faced the dilemma of paying back to the state the care provided to their parents decades after the transfer, even though the property n & # 39; 39 belonged more to the family and even though the products (if any) have long since disappeared. Similarly, the parents and others who had planned their activities under the laws in effect at the time of the transfers could have seen their planning – even if it had been done decades ago – overturned by the new law;

2. The duration of the Medicaid link has not been indicated;

3. The securities companies may have had many issues and potential financial exposure resulting from the resulting securities issues.

Due to pressure from the Bar Association, problems and inconsistencies noted, the regulations were not extended, they did not become permanent and expired after December 6, 2011 (4).

Extended estate recovery is repealed

Finally, on March 27, 2012, New York repealed (5) the regulation that expanded the definition of "estate" for purposes of Medicaid recovery; as a result, the old rules governing the recovery of estates are still in force and life estates are no longer vulnerable to recovery.

The results:

Although this result is a relief for seniors and their families in New York and brings the law back to constitutional and legal principles, it is fair to conclude that "writing is on the wall" that Medicaid will reinforce and the legislator will learn from this mishap. Future laws will surely include a grandfathering provision and will be in accordance with established law. The recommendation is clear: do your planning now, as long as it is still possible.


(1) As part of New York State's 2011 Budget Legislation, Chapter 59 of the 2011 Acts, the recovery of Medicaid claims has been expanded, changing the definition of "estate" in Article 369 (6) of the Social Services Act.

(2) The regulatory provisions of 18 NYCRR 360-7.11 have been amended effective September 8, 2011 to implement this change.

(3) 11 OHIP / ADM-8, entered into force on 8 September 2011, "Broader definition of wealth for Medicaid recoveries", concerning the application of regulations and the method to be used to assess the interests of the client. a home range.

(4) GIS 11 MA / 028 stated: "The purpose of this GIS is to inform local districts that, as of 12/6/2011, the revised 18 NYCRR 360-7.11 regulation implementing the expanded definition of the estate for the purposes of Medicaid recovery is expired., districts should not include assets that pass out of the probate estate into the estate of the deceased for recovery purposes. "

(5) Governor Cuomo and the state legislature have passed the New York State Health Budget Bill for 2012-2013, which repeals the expanded definition of "Succession". "from a Medicaid beneficiary.


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