Impact of the Medicaid Estate Recovery Program on Pennsylvania Farmers

By: Brian J. Hinkle, Esquire

As a result of healthier lifestyles and numerous advances in medicine, Americans as a whole are living longer than ever before. To the average American, this means that more of their savings are expended during their lifetimes leaving fewer savings to be passed on to the next generation. Oftentimes these modest lifelong savings are expended on the cost of long term care. To the farm community, this reality presents far more catastrophic consequences by threatening the farmer's ability to preserve the family farm for future generations.

One issue in particular that is threatening the preservation of the family farm is the potential for government liens to be placed on the family farm via the Medicaid Estate Recovery program. Under this program, the Pennsylvania Department of Human Services is required by the federal government to recover certain Medicaid/Medical Assistance benefits paid on behalf of an individual. One method of recovering these costs is by placing a Medicaid lien on any real property owned by an individual who received benefits, such as the family farm. If proper planning is not undertaken, these liens can effectively result in a forced sale of the family farm if the next generation is unable or unwilling to satisfy the lien.

Fortunately, there are options that help Pennsylvania farmers avoid the disastrous effect of a Medicaid lien. For example, an outright transfer of the family farm to the next generation will exempt it from the Medicaid Estate Recovery program provided that no application for Medicaid/Medical Assistance is submitted within five (5) years from the date of the transfer. The family farm can also be sold to the next generation for fair market value and the next generation can repay the purchase price over time. Moreover, certain transfers are exempt under Pennsylvania law, such as transfers to a "care-giver child."

The bottom line is this: with proper planning, the potentially catastrophic impact of long term care costs on farm families can be minimized or even eliminated.

Mette, Evans & Woodside attorneys can answer any questions you may have regarding elder law issues.


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