Medicaid Estate Recovery in New Jersey

What is recovered

DMAHS recovers all Medicaid services paid on the recipient's behalf, including institutional care, non-institutional services and managed-care (HMO) capitation payments, not only nursing-home costs.¹

Medicare cost-sharing paid under the Medicare Savings Programs is excluded from recovery, effective January 1, 2010.²

Who is subject to recovery

Medicaid Communication 17-15 makes payments for services received on or after age 55 subject to recovery, from beneficiaries and former beneficiaries who were 55 or older when they received the services.^{3, 1}

When recovery is deferred or barred

DMAHS defers recovery while there is a surviving spouse, a surviving child under age 21, or a surviving child who is blind or permanently and totally disabled under Social Security standards (42 U.S.C. 1382c).¹

When the exception ends (the spouse dies, the child turns 21, or the disability ends), DMAHS may recover from any remaining estate assets.¹

How the state files its claim

Under N.J.A.C. 10:49-14.1(d), for estates created on or after October 4, 1999, DMAHS must file its claim or lien within three years after it receives actual written notice of the beneficiary's death from the personal representative or any other interested party.³

The three-year period does not start until that written notice reaches the Division.³

Reasonable funeral expenses, reasonable costs of administering the estate, and debts owed to the Office of the Public Guardian for Elderly Adults are paid first. The DMAHS claim comes next, alongside debts and taxes with preference under federal or New Jersey law, before distributions to other creditors or heirs.²

When the state does not pursue a claim

Under N.J.A.C. 10:49-14.1(i), for beneficiaries who died on or after December 22, 1995, DMAHS may elect, in its sole discretion, not to pursue a claim it determines would not be cost-effective to collect.³

Undue-hardship waiver

N.J.A.C. 10:49-14.1(h) gives the estate representative 20 days from receiving notice of the DMAHS claim to request a waiver or compromise for undue hardship, with supporting evidence; DMAHS decides within 45 days. A hearing request must reach the Division within 20 days of receiving its decision.³

Undue hardship is shown only if the estate is or would become the survivors' sole income-producing asset and recovery is likely to leave one or more survivors eligible for public assistance or Medicaid. Hardship resulting from estate planning that divested assets to avoid recovery is rebuttably presumed not undue.³

Liens on real property

DMAHS files a lien against the estate for all payments for services received on or after age 55.²

Where a family member lived in the beneficiary's home before death and it remains that family member's primary residence, DMAHS may record a lien but will not enforce it until the property is sold or the resident dies or moves out.²

Governing law: N.J.S.A. 30:4D-7.2, 30:4D-7.2a; N.J.A.C. 10:49-14.1

DMAHS files its claim or lien, for estates created on or after October 4, 1999

three years after its receipt of actual written notice of the death³

Request for an undue-hardship waiver or compromise, with supporting evidence

within 20 days of receipt of the written notice of the DMAHS claim; A late request cannot be granted; DMAHS decides within 45 days^{3, 2}

Written request for a hearing to contest the waiver decision

within 20 days of receipt of the Division's decision³

Office of Administrative Law

Schedules the hearing when an estate representative contests a waiver decision, and notifies the parties³

• A recovery trigger for institutionalized recipients under age 55

1. 1.Estate Recovery Reminder Notice (NJ-ESTREC-E-0326)
2. 2.New Jersey Division of Medical Assistance and Health Services
3. 3.Medicaid Communication 17-15, Recoveries from Estates of Deceased Medicaid Beneficiaries and Former Medicaid Beneficiaries