Pennsylvania Estate Recovery Program: The State Gets Paid Back

Even after your loved one qualifies for and receives Medicaid benefits, the story doesn't end at death. Pennsylvania operates a Medicaid Estate Recovery Program under which the state seeks reimbursement from the decedent's estate for benefits paid.

Legal Framework

Pennsylvania's estate recovery program was enacted in 1994 (Act 49, codified at 62 P.S. § 1412) to comply with federal requirements under 42 U.S.C. § 1396p(b)(1). The regulations are published at 55 Pa. Code § 258.1 et seq. An important legal distinction: federal law prohibits placing a lien against the property of someone correctly receiving Medicaid benefits (42 USC § 1396(a)(1)). Therefore, Pennsylvania's recovery program is in the nature of a preferential claim against the decedent's estate — not a lien.

What Benefits Are Subject to Recovery?

• Benefits paid on behalf of a beneficiary age 55 or older
• Nursing facility services
• Home and community-based services
• Hospital and prescription drug services
• Medicare premium payments and cost-sharing for qualified Medicare beneficiaries
• All benefits paid after August 15, 1994 (the effective date of the estate recovery Act)

What Property Is Subject to Recovery?

Under 55 Pa. Code § 258.3:

• All real and personal property in the decedent's probate estate, whether or not actually administered
• Certain life insurance policies payable to the decedent's estate (even with facility of payment clauses)
• Deposit accounts payable to family under 20 Pa.C.S. § 3101(b) (accounts up to $20,000 per institution) and patient care accounts under § 3101(c) (up to $10,000) where funeral expenses have been paid

Priority of the DHS Claim

Under 20 Pa.C.S. § 3392, estate claims are paid in order of priority. Medical Assistance Estate Recovery falls under Class VI — claims by the Commonwealth and political subdivisions. It ranks below administration costs, the family exemption, funeral/medical expenses from the last 6 months, grave markers, and rent — but above all general creditor claims.

The Notice Requirement — Don't Skip This

Personal representatives of estates where the decedent was 55 or older at death must notify the Department of Human Services (formerly DPW) of the death, the grant of letters, and request a statement of claim. This notice must be sent by certified mail (return receipt requested), fax (717-772-6553), or email.

DHS has 45 days from receipt of proper notice to submit its claim — or the claim is forfeited. But the 45-day clock does not start until DHS receives a fully compliant notice. There is no limit on the number of years for which DHS can seek recovery, except that it cannot reach back before August 15, 1994.