How To Avoid Pennsylvania Estate Recovery

If you’re researching how to avoid Pennsylvania Estate Recovery, there is a reasonable chance that either a loved one is in a skilled nursing facility or about to enter a skilled nursing facility.

Many families want to know how to avoid Pennsylvania Estate Recovery because they want to protect assets and avoid the costly financial spend-down that Pennsylvania Medicaid eligibility can entail.   Moreover, these families want to ensure that once their loved one dies, they will not be forced to repay Pennsylvania for healthcare costs.

Before we discuss how to avoid Pennsylvania Estate Recovery, let’s talk about what Estate Recovery is.

What is Pennsylvania Estate Recovery?

Pennsylvania Estate Recovery is a program that requires the Department of Human Resources to recover the money that Medicaid spent on your loved one while he or she was a Medicaid resident at a skilled nursing facility.

This amount would approximately be the difference between your family members fixed income and the Medicaid rate at the skilled nursing facility multiplied by the number of months your loved was a resident.  So if mom’s income was $2000 per month and the Medicaid rate at the skilled nursing facility was $6000 per month, and mom was a Medicaid eligible resident for 18 months, then the Estate Recovery program would attempt to recover $72,000 ($4,000 times 18).

But What Is An Estate?

As the name suggests, the Pennsylvania Estate Recovery Program can only collect and reimburse the Medicaid Program from a decedent’s estate.  An estate is property (including the family home) and assets (bank accounts, for example) that were owned entirely or partly by your loved one.

Who Is Most Impacted By Pennsylvania Estate Recovery?

Single or widowed persons that own their home are most negatively impacted by the Estate Recovery program in Pennsylvania.  Their families should be most interested in how to avoid Pennsylvania Estate Recovery.

The primary residence, or family home, is the asset most impacted by the Estate Recovery program.  This is unfortunate.  Often times, the home has been in the family for many decades, and the goal was to pass it down to the next generation.  Under Estate Recovery, these wishes can be difficult to achieve.

If a single or widowed person is a Medicaid recipient at death, they will have very little in assets.  To be eligible for Medicaid, the recipient must have had less than $8,000 or $2,400.  Therefore, the biggest asset in the estate will be the family home.

How To Avoid Pennsylvania Estate Recovery

The two keys to avoid Pennsylvania Estate Recovery are: 1) develop and implement a plan before spending down assets, and 2) removing assets from the estate.

Fortunately, the laws of Pennsylvania permit “crisis” Medicaid planning for married and single Medicaid applicants.  These generous regulations allow families to preserve important assets like the family home and other savings.

The key to this type of planning is an understanding of the Medicaid laws and what can and can’t be accomplished.  Given the current Medicaid laws in Pennsylvania, a single person can potentially avoid losing the family home to the Estate Recovery program.  They can save approximately 50 percent of their assets, including the primary residence.   This is a much better than the alternative: spending down all assets and then losing the family home.

A married person can avoid Estate Recovery altogether and avoid any spend down of hard earned assets.  Through gifting, trust, and annuity strategies, the skilled attorney can accomplish Medicaid eligibility and avoid spending down hundreds of thousands of dollars.

Please contact VA Legal Team now for a no-charge consultation.