Medicaid is the joint federal/state program that pays for long-term care in a nursing home. But, to receive Medicaid benefits, the recipient can have only a very minimal level of assets and other income. Also, effective July 1, 1994, Iowa established an estate recovery program that authorizes the state (Iowa Dept. of Human Services) to recoup Medicaid payments from estates of recipients. Recovery is available from assets in the Medicaid recipient’s estate. “Assets” are defined as “any real property, personal property, or other asset in which the recipient…had any legal title or interest at the time of the recipient’s…death.” (Iowa Code §249A.5(2)). The phrase “at the time of death” means the time immediately before the Medicaid recipient’s death. So, a life estate may be included in the estate of a deceased Medicaid recipient with its value subject to payment of Medicaid debt. But, what about jointly-held property? A recent Iowa Supreme Court opinion holds that jointly held property is an asset of the decedent for purposes of Medicaid estate recovery.
In this case, a husband and wife owned their home in joint tenancy until the husband’s death in 1966. The surviving spouse continued to own the home outright until her health began to slip in the mid-1980s. Her son and his wife took care of Mom by traveling from their nearby farm to the home several times a day. Over time, it was agreed that the son would build an addition onto the home so that he and his wife and daughter could live in the home with Mom to more easily care for her. He did so, and Mom executed a deed conveying the home to herself and her son and daughter-in-law in joint tenancy. After about eight years, Mom was moved to a nursing home where she resided for a little over a year until her death. While she was in the nursing home, she received Medicaid benefits. On her death, the state filed a reimbursement claim in Mom’s estate to be paid from the value of Mom’s one-third joint interest in the home. The trial court allowed the claim, concluding that the Iowa estate reimbursement law was not an unconstitutional impairment of contracts, and ordered the home sold with one-third of the proceeds after costs of sale to pay the Medicaid debt. On appeal the Iowa Supreme Court agreed, but held that the trial court did not have the power to order the sale of the entire property, just Mom’s one-third joint interest in the home that she owned immediately before she died. That can be accomplished by determining a buyout figure equal to Mom’s one-third interest in the home (plus accumulated interest) so as to avoid the outright sale of the home.In re Estate of Serovy, 711 N.W.2d 290 (Iowa Sup. Ct. 2006).