(615) 453-7553
(615) 453-7551
1037 West Main Street • Suite C
Lebanon, Tennessee 37087

Estate Recovery Rules:

Federal law mandates that each state recover Medicaid benefits paid on behalf of individuals age 55 and older from that person’s estate. The definition of estate is different for each state. In Tennessee, an estate is limited to an individual’s probate estate. Tennessee’s estate recovery statute is found in Tennessee Code Annotated, §71-5-116. In other words, if an individual receives Medicaid benefits and has assets in their estate at death, with certain exceptions, TennCare has the ability to recoup all funds paid on behalf of that individual.

Practice Areas

Medicaid Eligibility:

Medicaid and Medicare are two distinct programs; however, they are often confused. Where Medicare is an entitlement program, Medicaid is means tested. An individual must meet certain technical, medical and financial criteria before being eligible for Medicaid benefits.

Eligibility Requirements:

  • Technical
    A person applying for Medicaid benefits in the state of Tennessee must meet the following technical requirements to be eligible:
    • be a United States citizen or a lawfully admitted alien or be an alien permanently resident in the United States under color of law;
    • be age 65 or older, blind or disabled; and
    • be a resident of the state of Tennessee.
  • Medical
    Medical criteria include being confined continuously in a nursing home or other qualifying medical institution for at least thirty (30) days and not be able to perform the activities of daily living (ADLs). Examples of ADLs are eating, transferring from the bed to a chair, toileting and walking. It is the responsibility of the Bureau of TennCare to determine an individual’s need for care and the level of care required.This is accomplished by having a physician examine the individual to verify medical eligibility and complete a Pre-Admission Evaluation (PAE) before payments are made.The PAE is then reviewed by the Bureau of TennCare.
  • Financial
    The final criteria in qualifying for Medicaid benefits is meeting the financial requirements.  Medicaid looks at income and assets to determine financial eligibility.  There are distinct differences between each:
    • Income
      Tennessee is an income cap state. In an income cap state, if a person’s income is over the cap limit, they will be disqualified from receiving benefits. The current (2012) cap limit is $2094.00. The amount is adjusted each year. Most individuals who are applying for Medicaid benefits rarely have enough income to cover the cost of long-term care. But what happens when someone’s income is less than the costs of long-term care but more than the income cap? In these situations, federal law allows an individual to set up a Qualified Income Trust (“QIT”), also known as a “Miller Trust” to allow income to pass directly to the nursing home. The QIT requires the administrator to do the following:
      • pay to the beneficiary a monthly personal needs allowance; ($50)
      • pay to the spouse, if any, a sum sufficient to provide a minimum monthly maintenance needs allowance; and
      • pay the cost of medical assistance from any funds remaining in the trust.

      There must also be a clause in the QIT that provides that upon the death of the beneficiary, any funds left in the trust must be paid to the state agency administering Medicaid as reimbursement for costs provided to the beneficiary during their lifetime.  In addition, there can be no early termination provisions prior to an individual’s death.

      After the QIT has been established, the assigned income is not counted toward Medicaid income eligibility, but is treated as available income for purposes of calculating the beneficiary’s duty to contribute to the cost of care because it is anticipated that the QIT will zero out each month with payment of the above costs.

    • Assets
      An individual applying for Medicaid cannot have more than $2,000 dollars in countable assets.  Married couples can have no more than
      $3,000 dollars in assets.  Assets are divided into countable and exempt categories.  Examples of exempt assets are the following:
      • $2,000 in cash
      • home or principle place of residence, which is subject to a $500,000 equity limitation
      • one automobile regardless of value
      • personal property such as household contents, jewelry and clothing
      • burial funds
      • property essential to self-support
      • unavailable or inaccessible property
      • life insurance with a face value less than $1,500

    Examples of countable assets are:

      • cash, checking accounts and savings accounts over $2,000
      • certificates of deposit
      • stocks, bonds and mutual funds
      • cash values of life insurance policies if the face value is more than $1,500
      • all automobiles after the first exemption
      • annuities

    For married couples, the assets are divided between the spouse applying for benefits (the institutionalized spouse) and the spouse left in the community (the community spouse). Before the rules were changed, the community spouse was often impoverished because in order to qualify, the couple could not have more than $2,000 in assets for Medicaid to pay for nursing home care for the institutionalized spouse. In an effort to avoid impoverishment, the community spouse is allowed to own a certain amount of the couples’ assets that are not counted against the institutionalized spouse. This amount is referred to as the Community Spouse Resource Allowance or CSRA. The institutionalized spouse must still meet the criteria for Medicaid eligibility and with proper planning; the community spouse will not be impoverished.