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A Better Partnership
March 02, 2016

Proceeds from the sale of a home do not qualify for "home of modest value" hardship waiver for Medicaid reimbursement by a decedent's estate

In Estate of Ketchum v. Dep't of Health and Human Services, No. 324741, the Court of Appeals determined that the cash proceeds from the sale of a home did not qualify for the "home of modest value" exception to estate reimbursement of Medicaid costs.  The Court found that the State Recovery plan was within the bounds set by the legislature, and that Plan while providing for a hardship waiver for an estate consisting of a home of modest value, did not allow for such a waiver where the estate held cash from the sale of a modest home.

In this case the estate of a decedent sought to prevent the state from recovering the Medicaid long-term care costs paid to the decedent.  Specifically, the dispute centered on a house that had been sold by the estate for $30,000.  The estate argued that those proceeds should not be turned over to reimburse for the Medicaid costs, pointing to an hardship exception in MCL 400.112g(3)(e)(i), which provides "[a]n exemption for the portion of the value of the medical assistance recipient's homestead that is equal to or less than 50% of the average price of a home in the county in which the medicaid recipient's homestead is located as of the date of the medical assistance recipient's death."  Here, there is no dispute that the home at issue was less than 50% of the average home price in the relevant County. 

The Court of Appeals reversed the Circuit Court's ruling that the exemption applied, finding that although the statute and state's implementing plan do not explicitly state that the exemption can no longer be obtained after the homestead is sold, the plan does state that hardship exemptions are temporary, and expire when the conditions for the hardship waiver no longer exist.  Here, the home had been sold for cash, thus the estate no longer held a modest homestead that qualified for the exemption.  Thus, the Court remanded the case for summary disposition in favor of the state.

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