Q. I was told if you’re over 55 and on Medicaid and you earn more than the earning limits, they want money back for the benefits you used, plus capitation, when you die. Either you pay this or get a fine. Is this right?
A. Here’s how it works.
Under both federal and New Jersey law, Medicaid is required to recover funds from the estate of an individual receiving — or who has received — Medicaid benefits on or after age 55.
This includes “capitation” payments made to any managed care organization that would have been reimbursed regardless of whether any services were received, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.
A capitation fee is a fixed amount per patient that is paid to a health care provider by the federal and state for each patient enrolled in a capitated insurance plan, she said.
“The capitation fee varies depending on the contract among the federal and state agencies and the insurance carrier,” she said.
The estate consists of any property, whether in sole or joint name, that the beneficiary had any legal title or interest in at the time of his or her death including a residence, personal or real property, bank accounts, a living trust or other arrangement, and proceeds of life insurance policies, she said.
Whitenack said the funds don’t need to be probate assets, for example, they may have designated beneficiaries such as life insurance policies.
“Unless there is a surviving spouse, a minor child or a surviving child of any age who is blind or disabled, Medicaid will place a lien on property after the death of the Medicaid beneficiary if the amount to be recovered is in excess of $500 and the estate is in excess of $3,000,” she said.
The personal representative of the estate of the Medicaid beneficiary — the executor or administrator — must contact Medicaid in writing to ascertain whether Medicaid has a right to recovery, she said.
“Medicaid then has ninety (90) days from receipt of the letter to respond,” Whitenack said. “The personal representative should ask Medicaid for a detailed `bill,’ which will include the capitation costs attributed to the deceased Medicaid beneficiary.”
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Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.