The Division of Medical Assistance (the "DMA") continues to issue regulations implementing and clarifying the MassHealth changes enacted as part of the fiscal year 2004 budget. In regulations due to take effect on November 15, the DMA makes it clear they will use the fair market value of real estate when determining the value of its estate recovery claim.
For MassHealth recipients who died before July 1, 2003, the DMA could only file a claim for any amounts paid out on behalf of a MassHealth recipient from his or her probate estate. The Massachusetts legislature recently broadened the scope of this estate recovery claim for those dying on or after July 1, 2003 to non-probate assets. Under the new law, the Commonwealth may recover any amounts paid on behalf of a MassHealth recipient from "any interest" the MassHealth recipient had in property on his or her date of death, whether or not it passes through probate.
While many parts of the new law remain unclear, including what exactly "any interest" may be, recent regulations suggest that the amount used to value a MassHealth recipient's interest in real property will be the fair market value. The DMA will require verification of the value of any real property in the form of the most recent tax bill and a comparable market analysis or written appraisal of the property value from "a knowledgeable source." A "knowledgeable source" includes a licensed real-estate agent or broker, a real estate appraiser or an official from a bank, savings and loan, or similar lending institution who does not have any real or apparent conflict of interest with the estate. In addition, the DMA has the right to obtain its own assessment of the property value from a knowledgeable source.
These reporting requirements only come into effect if the DMA's claim will not be paid in full from the sale or transfer of the property. The verifications must be provided to the DMA before the sale or transfer takes place. This may place a heavy burden on heirs of a MassHealth recipient who find a buyer but cannot close until obtaining the requisite documentation for the DMA.
The recovery is limited to any benefits correctly paid for services provided while the MassHealth recipient was 55 or older. Also, the recovery is not required until after the death of a surviving spouse, a blind or permanently disabled child or a child under the age of 21. The new regulations also include a very limited hardship waiver.
The new regulations replace 130 CMR 501.013 & 515.011 and can be reviewed on the DMA's website at https://www.state.ma.us/dma/publications/ELs/EL2003/EL-113.pdf.
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