None of us know how long we are going to live. This uncertainty makes planning for long term care a daunting task, especially since the average cost of a nursing home in Mississippi is over $7,000 a month. Some may have purchased long-term care insurance to cover most of these costs. For many individuals, applying for Medicaid will be the only way they can afford to stay in a nursing home, while others could possibly afford to pay for several years but would rather engage in Medicaid planning to become eligible for Medicaid benefits while preserving as much of their assets for their descendants as possible. Regardless, those who apply for Medicaid benefits, whether for assistance with paying nursing home costs or for any other reason, should be aware of the Mississippi Division of Medicaid’s estate recovery process and plan for it.
Medicaid has always been intended to be “the payer of last resort,” and excess resources saved by virtue of Medicaid funds are meant to be tracked and recovered. Historically, each state’s Division of Medicaid had the option to establish an estate recovery plan to attempt to recover these amounts. In 1993, the federal Omnibus Budget Reconciliation Act (“OBRA”) was signed into law that changed this option to a requirement that each state enact an estate recovery plan. The OBRA requires each state’s Division of Medicaid (Mississippi’s division referred to hereafter as the “Division”) to seek to recover amounts paid for the benefit of Medicaid beneficiaries against all “assets included within the [beneficiary’s] estate, as defined for purposes of State probate law,” subject to certain conditions and restrictions. The idea being that if the beneficiary had any assets at their death, those assets should be used to repay Medicaid before passing to the beneficiary’s heirs.
The OBRA allows each state the option to expand the definition of “estate” beyond the state probate law definition. However, when the Mississippi Legislature enacted its estate recovery provisions which the governor signed into law effective July 1, 1994, it chose not to expand the definition of estate. Thus, the Division is limited to recovering from amounts included in the beneficiary’s probate estate alone (as defined by Mississippi probate law). The OBRA also allows each state’s division the option to seek estate recovery against the proceeds from the sale of property subject to a lien during the beneficiary’s lifetime, however Mississippi has no Medicaid lien law. Accordingly, the Division is only allowed to recover against the beneficiary’s estate.
In order for an individual to qualify for Medicaid, they must must meet specific income, resource, and transfer requirements. While an in-depth discussion of these requirements is beyond the scope of this article, suffice it to say that the resource requirements allow only a very small amount of assets to be owned by the individual ($4,000 for an unmarried individual in 2023). This asset limit does not include the value of certain “excluded assets” such as the individual’s home, household goods, personal effects, automobile, prepaid burial plot, and other assets. However, this exception for excluded assets does not apply to the assets subject to estate recovery. That is, subject to the specifics and limitations discussed below, all assets of a beneficiary’s probate estate will be subject to estate recovery. Thus, while the countable assets for Medicaid eligibility may be below the resource requirements, the individual could still have excluded assets of significant value. For most assets subject to estate recovery, the Division will have the power to force a sale of such assets to recover amounts due.
The Mississippi estate recovery statute requires that the personal representative of the decedent’s estate notice the Division as an identified creditor during the estate administration process. This puts the Division on notice that they should attempt to probate a claim against the estate of the beneficiary. For more details on the Mississippi estate administration process, including the process for noticing creditors, see my prior article. The Estate Recovery Branch of the Division is responsible for determining the estate value and amounts paid for the benefit of the beneficiary by Medicaid for long term care related services and HCBS. The beneficiary’s heirs and/or the personal representative of the beneficiary’s estate are contacted by the Estate Recovery Branch via mail with the amount due to the Division at some point at least 30 days after the beneficiary’s death.
Specifics and Exemptions
You might now be worried about Medicaid taking your family home if you or your spouse eventually have to go into a nursing home. Fortunately, Mississippi’s estate recovery plan only applies in certain situations and is subject to several restrictions. Four of the most important ones are discussed below.
First, the Division is prohibited from attempting to employ estate recovery when a deceased Medicaid beneficiary has any of the following:
- a surviving spouse;
- a surviving child who is under 21 years old;
- a surviving child who is blind or permanently and totally disabled; or
- as otherwise provided by federal law and regulation, if it is determined by the Division or by court order that there is undue hardship.
The undue hardship exemption referenced above is reviewed by the Estate Recovery Branch on a case-by-case basis and may include the following:
- the property is the sole income-producing asset of the beneficiary’s heirs, who themselves have limited income;
- the estate is of modest value, meaning less than $5,000; and
- An adult relative of the beneficiary lived in the home for at least a year before the beneficiary went in the nursing home or on a waiver program, and the adult relative provided care to the beneficiary is now dependent on the property for a home.
Second, the Division is prohibited from attempting to employ estate recovery against the beneficiary’s home if any of the following are lawfully residing in the home:
- a surviving spouse of the beneficiary;
- a surviving child of the beneficiary who:
- is under 21 years old;
- is blind or permanently and totally disabled; or
- was residing in the beneficiary’s home for a period of at least two years immediately before the date of the beneficiary’s admission to the medical institution, and who establishes to the satisfaction of the Division that he or she provided care to such beneficiary which permitted them to reside at home rather than in an institution; or
- a sibling of the beneficiary who has an equity interest in such home and who was residing in the beneficiary’s home for a period of at least one year immediately before the date of the beneficiary’s admission to the medical institution.
In addition to the limitations on recovery against a beneficiary’s home listed above, there is another important exception related to the beneficiary’s home provided by the Estate of Darby v. Stinson case, which I intend to address in a future article.
Third, the amount the Division can recover is limited to amounts paid for nursing home care, HCBS, and related hospital and prescription drug services paid by the Division after the recipient was age 55 years of age. This means that any benefits received by the Beneficiary before they turned 55 will not be subject to estate recovery.
Fourth, the Division can only recover against the estate (as defined under Mississippi probate law) of a beneficiary that died while a resident of a nursing home or while receiving HCBS. Thus, a beneficiary who was a nursing home resident that leaves the facility and goes back to their home or lives with a friend or family member and is no longer on Medicaid when they die, there will be no estate recovery. This also means that the Division cannot attempt to recover from the estate of a spouse of a Medicaid beneficiary. Finally, since the Division is restricted to assets of the probate estate, anything passing outside of the probate estate will not be subject to estate recovery. This means that assets such as those exempt from sale or seizure under Miss. Code Ann. §§ 91-1-19 and 85-3-1, owned with any right of survivorship (for which at least one of the other joint owners survives the beneficiary), subject to beneficiary designations and/or transfer on death provisions, and assets transferred during the beneficiary’s life will also not be subject to estate recovery (although be cautious when considering making transfers during the beneficiary’s lifetime, as such transfers may constitute a transfer penalty and impact their eligibility for Medicaid benefits).
Mississippi’s Medicaid rules and requirements are so complex that even many lawyers do not understand significant portions of them. The estate recovery process is only one part of the Medicaid rules; however, it is one that can often be overlooked when planning for long term care. While a Medicaid beneficiary’s estate may not be subject to the full private pay cost of staying in a nursing home, the estate will still potentially be subject to recovery for a lesser cost of care amount. In Mississippi this amount is likely closer to $5,000 per month compared to the private pay rate of more than $7,000. Even at this lesser rate, a beneficiary can easily amass enough benefits paid on their behalf such that they could not reimburse Medicaid even if all of their assets were sold. Fortunately, the Division is limited with respect to the amounts it can recover, when it can (and cannot) recover those amounts, and from what assets. One of the most significant restrictions is that only the beneficiary’s probate estate is subject to estate recovery. The Darby case provided additional protections for the home of the beneficiary, so be on the lookout for a future article diving into detail on the interaction between the Mississippi estate recovery process and homestead exemption. Individuals would be well advised to hire an attorney well versed in elder law to ensure that any long term care planning is properly undertaken, including planning for Medicaid and estate recovery to maximize the amount of assets which will be available to pass to their heirs.
 Idaho Dept. Of Health & Welfare v. McCormick, 153 Idaho 468, 283 P.3d 785 (2012).
 42 U.S.C. Section 1396p(b)(1).
 42 U.S.C. Section 1396p(b)(4)(A).
 42 U.S.C. Section 1396p(b)(4)(B).
 Miss. Code Ann. § 43-13-317.
 Miss. Code Ann. § 43-13-317(1).
 Miss. Code Ann. § 43-13-317(2).
 Mississippi Division of Medicaid, “ESTATE RECOVERY: What do I need to KNOW?“, https://medicaid.ms.gov/medicaid-coverage/member-services/estate-recovery/.
 42 U.S.C. Section 1396p(b)(2).
 Estate of Darby v. Stinson, 68 So.3d 702 (Miss. App. 2011).
 Miss. Code Ann. § 43-13-317(2).
 42 U.S.C. Section 1396p(a)(3).
 Hines v. Department of Public Aid, 221 Ill. 2d 222, 302 Ill. Dec. 711, 850 N.E.2d 148 (2006).
 Estate of Darby v. Stinson, 68 So.3d 702 (Miss. App. 2011).