New Year, New Estate Recovery Headaches

By Kathleen Rose Rodberg

By now most of you have heard about changes to North Carolina’s estate recovery program and may even have clients facing uncertainty in the wake of these changes.  This blog article will bring you up to speed on the developments so far and things to keep in mind while assisting with estate recovery cases.


In 2017, North Carolina adopted an amendment to its State Medicaid Plan that changed waivers of estate recovery in certain cases, most notably when the recipient is survived by a spouse or disabled child, to a deferral.  State Plan Amendment 17-0005 was approved by the Center for Medicare & Medicaid Services on August 1, 2017.  Additional, but less substantive, edits were approved by State Plan Amendment 18-0002 approved on August 17, 2018.

You may be thinking to yourself … this has been on the books since 2017? How did I not know?

Learn more about this and other practice area topics at the 2019 NCBA Elder & Special Needs Law Symposium at Pinehurst Resort on Feb. 21 and 22. Register here.

While the information about the 2017 amendment has been known and of concern since its approval, the changes were not yet implemented and questions about how those changes would be implemented and when were not known.  This leads us to today.

Fall 2018 – Implementation Begins

Change Notice 06-18 dated December 3, 2018, updated MA-2285 of the Adult Medicaid Manual regarding Estate Recovery.  On the plus side, the changes allowed disabled children to certify disability by a physician in the event a disability award letter cannot be obtained from Social Security Administration. However, this Change Notice also began the process of updating the manual and estate recovery notices to provide for deferral instead of waivers for surviving spouses and disabled children.

As much as a month prior to Change Notice 06-18, possibly sooner (though I have not heard of any prior to November 2018 yet), Health Management Systems (HMS) began sending out estate recovery letters on behalf of the N.C. Division of Health Benefits (DHB) stating: “This letter is to inform you that…(Medicaid) will defer recovery of the claim.  Medicaid defers recovery against estates when there is a surviving spouse.  Estate recovery will be deferred only as long as there is a surviving spouse.  DHB must be notified if the surviving spouse passes away, or if there is any attempt to transfer the property.”  Those noticing the manual changes and beginning to see these letters from HMS have sparked a wave of concern about how these changes will impact clients.

Things To Keep In Mind

There are some practical reminders and some legal issues to keep in mind with these changes.

  • Issues with Method of Creation.  There are good arguments that some of these new procedures were not adopted appropriately and in accordance with relevant state and federal laws and rules.
  • Letters Use Broad Language.  The requirements outlined in the letters that are being sent out go beyond the language provided in the state plan amendment.
  • Practical Considerations.  When evaluating whether a decedent’s property will be subject to the deferral system, keep in mind practical issues.  For example: was the home transferred to the community spouse before death, and thus not part of the Medicaid recipient’s estate?

While the terms of the state plan amendment are concerning and have created uncertainty surrounding some estate recovery procedures, don’t forget to be practical in your evaluation of the facts and circumstances and how it relates to statutes governing the administration of estates.

If you have questions about an estate recovery case and/or are considering a legal challenge on behalf of a client, please consider notifying members of the NCBA Elder & Special Needs Law Council and Doug Sea, Senior Attorney at the Charlotte Center for Legal Advocacy, at or (704) 971-2593.  While legal challenges may be inevitable, it is important that such challenges be approached with caution as there could be repercussions for elder law practitioners across the state.

We will be covering more about this topic along with many other recent state and federal developments at the 2019 NCBA Elder and Special Needs Law Symposium taking place at Pinehurst Resort on Feb. 21 and 22.  Register today and join us!