Will the state come after my money when I die?

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Q. I am a retired 55-year-old widow. Several years ago, my income dropped because my Social Security survivor benefits ended and I ended up in the NJ FamilyCare Medicaid program. I have high assets but they are no longer taken into account for people under 65 under federal guidelines when buying insurance. What types of payments will the state try to recover upon my death? Should I buy insurance in the private sector if I want to avoid this issue?
— Concerned

A. As all things Medicaid, this is a pretty complicated situation.

Medicaid payments for services received on or after age 55 under the NJ FamilyCare program are subject to estate recovery, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

This is specifically set forth on all NJ FamilyCare applications, including on the online or paper version application, the cardstock delivering the program’s identification card, notices sent to the recipient advising of the enrollment into a managed care organization, redetermination packets and redetermination notices sent to the recipients, she said.

Whitenack said the Department of Human Services, Division of Medical Assistance and Health Services (DHMAS) has an immediate right to recover from the estate of the Medicaid recipient unless there is a surviving spouse or child under age 21 or who is blind or permanently and totally disabled according to the Social Security definition of disability.

“New Jersey uses an expanded definition of estate recovery, which includes any property that belonged to the deceased person at the moment prior to his or her death,” Whitenack said. “This includes property such as the deceased person’s home or share of a home, bank accounts, whether solely or jointly held, trusts, annuities, stocks, bonds and any other real or personal property.”

Proceeds from life insurance policies which designate a beneficiary other than the estate are exempt from estate recovery, she said.

So should you stay in the program or buy insurance in the private sector? It’s a tough question and you should meet with a qualified financial advisor or an estate planning attorney who can consider the details of your personal situation and goals.

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This story was originally published on Nov. 25, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.