Millions of new enrollees are signing up for Medicaid due to its expansion under Obamacare, but many will be shocked to learn that their estates can be held liable for the costs of their healthcare.
As part of the 1993 budget reconciliation bill, Congress required states to implement the Medicaid Estate Recovery Program (MERP) to seek reimbursement of payments for nursing homes and long-term care facilities.
Obamacare, officially known as The Affordable Care Act, greatly expanded the services for which reimbursement can be pursued, and states can now use liens to recover money spent by Medicaid for services beyond long-term care.
States have discretion in how to implement the law, with some seeking to collect nearly all medical expenses.
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The goal is to die broke so there is no estate to collect taxes and debts from.
ReplyDeleteThe uber wealthy put the money into trusts and foundations.
Normal people can use tax free gifts to their family over the course of many years. Think about it - at $10k tax free per year per person, you and a spouse can pass $80k annually to a family of 4.
3:16 if you owe money the feds can come after your family for that money. They can go back as far as 8 yrs. Happens all the time when someone ends up in a nursing home, runs out of money and goes on Medicaid and they gifted family members with sums of money greater than your average $100 check for a birthday. Family then becomes liable.
ReplyDeleteAs far as trusts are concerned, taxes are paid on the undistributed income as well as any beneficiaries must list any trust income on their taxes and pay taxes if exceed the person's threshold.
It's kind of complicated but basically you are screwed as far as taxes no matter what you do.