When an elder law attorney meets with a family for the first time to discuss planning for long term care, most families have a basic understanding of Medicaid’s eligibility requirements, but are not familiar with Medicaid’s right to estate recovery after the recipient passes away. Estate recovery is the state’s process of seeking reimbursement for expenses incurred while providing for the medical care and long term expenses of the deceased Medicaid recipient. Through the Division of Medical Assistance and Health Service (“DMAHS”), New Jersey is statutorily required to attempt to seek reimbursement from the estate of a deceased Medicaid recipient once the DMAHS is notified recipient’s passing.

Many New Jersey families have the misconception that an individual’s estate only includes those assets that pass via Will through probate; however, assets such as jointly owned accounts and real property that pass through right of survivorship are not protected from estate recovery. Although non-probate assets are protected from estate recovery in Pennsylvania, this is not the case in New Jersey.

New Jersey Medicaid utilizes an “expanded” definition of “estate” for its recovery process. DMAHS can seek recovery against any asset the deceased Medicaid recipient held legal title or interest in at the time of his or her death. This means DMAHS can recover against life insurance, pension benefits, retirement accounts, jointly owned real estate and accounts, and other assets that typically pass outside of the Will to a beneficiary.

Estate recovery is a very complicated area of New Jersey’s Medicaid system. It is not recommended for a family to attempt to digest the regulations alone because there are several exceptions to New Jersey’s recovery rules. Planning with an attorney specialized in this area can avoid these hardships and navigate the system effectively. The key is to seek legal counsel while there is still ample time to prepare for a long term care crisis.