By Andrea K. Kovar, Attorney, Generation Law

Medicaid is a public insurance program that offers health coverage to low-income families and individuals, including seniors and people with disabilities. Medicaid also covers long-term care, including both nursing home care and many home and community-based long-term services and supports.

To help pay for these long-term services, every state (including Illinois) is required to implement a Medicaid Estate Recovery Program (MERP). For those who receive assistance through the Aid to the Aged, Blind or Disabled (AABD) program (such as paying for nursing home room and board), federal law requires Medicaid to seek recovery from a deceased Medicaid beneficiary’s estate for the value of the medical assistance provided to them after they reached age 55, except when the recipient has a surviving, spouse, child under age 21, or blind or disabled child of any age.

In a welcome move, the Illinois Department of Healthcare and Family Services (HFS) has issued a proposed amendment to the Illinois Administrative Code that would exempt the first $25,000 of a deceased Medicaid recipient’s probate estate from recovery under MERP (this follows a recent change in Illinois law). HFS will consider the gross assets in the estate, including, but not limited to, the net value of real estate less mortgages or liens with priority over its claims. The new law, which is pending federal approval, would apply to estates opened on or after July 1, 2022.

This means that if a loved one dies, the survivors do not need to worry about the State of Illinois recovering small amounts of money from the beneficiary of the decedent’s estate.

Please keep in mind that the Department proposed these rules. They are not in force yet. We expect the these rule to become permanent with some possible modification later this year.