Many people in New Jersey rely on Medicaid benefits to pay for their care needs as they age. However, what they may not know is that upon their death, Uncle Sam may come knocking, seeking recovery from the deceased’s estate of what was paid for using Medicaid benefits.

In general, under both federal law and New Jersey law, once a Medicaid recipient passes away, the state will recover the funds from the deceased’s estate for all payments that were made using the Medicaid program once the recipient reached age 55. For Medicaid recovery purposes, the deceased’s home, bank accounts, trusts and annuities, stocks and bonds and other tangible pieces of property constitute the deceased’s estate, even if these assets have been passed on to the deceased’s survivors.

Recovery will commence immediately if the deceased has no surviving spouse and no minor children or disabled children. However, recovery will not be sought if doing so would not be not cost-effective. Recovery also won’t be sought if the estate assets are the only source of income for one or more of the deceased’s survivors and recovery would increase the chance that the survivor would have to apply for government benefits, including Medicaid.

Also, recovery won’t be sought if a relative of the deceased lived in a home owned by the deceased before their death, and it is their primary residence. In that situation, a Medicaid lien will be placed on the home but will not be enforced until the home is sold or the relative living in it passes away or vacates the home. Finally, if the deceased has a surviving child under age 21 or a surviving spouse, recovery will be delayed until the child reaches age 21 or the surviving spouse passes away.

While there are some exceptions or delays to Medicaid recovery, many New Jersey recipients should be aware that Medicaid recovery is a possibility. Those who have questions about recovery and how it will affect their estate should discuss the matter with an attorney experienced in elder law, to determine what type of Medicaid planning options they have or if there are other ways they can protect their estate.