Bulletin: NE2017004

Dear Associates: 

Nebraska has gone through a three-year process of legislation involving reimbursement of funds paid through Medicaid. First was LB 72 (2015), which will still be in effect until August 22, 2017; then LB 1103 (2016); and now LB 268 (2017), which will go into effect on August 23, 2017.

Medicaid Reimbursement is now known as Medical Assistance Reimbursement (MAR). 

I. EXISTING LAW

A. Trustee of trust that becomes irrevocable on death of the trustor/settlor is restricted from transferring trust assets to beneficiaries before satisfaction of claim for MAR or waiver by Department of Health and Human Services (DHHS).

B. Certain trustees may transfer assets before waiver:

1. Trust company

2. Nebraska licensed attorney

3. Corporate trustee or duly qualified financial institution

C. Notices to DHHS. Notice is still required, but manner of giving notice has been made more specific: Notice is to be given at an address designated by DHHS; acceptable manner of delivery, which may be email, will be posted on the DHHS website. Any other manner of delivery renders request for waiver or notice is void. (The author supposes this means that email will be the default method of giving notice to DHHS, but the DHHS website should always be checked to determine the address to which notice is to be directed.)

D. Debt arises: Debt for the total amount paid for medical assistance arises if recipient of medical assistance:

1. Was 55 years of age or older at the time medical assistance was provided; or

2. Resided in a medical institution at the time of institutionalization or application for medical assistance.

II.  LB 268 CHANGES/”ENHANCEMENTS”

A. EFFECTIVE DATE: LB 268 was approved by the governor on May 22, 2017, without an emergency clause and will therefore become effective three calendar months after adjournment of the Unicameral, or August 23, 2017. The Bill will therefore apply to transactions on or after that date.

B. CRITICAL DEFINITIONS TO REMEMBER

    A. Related Transferees:

i. Lineal ancestors or descendants or siblings of the transferor (father, mother, grandparents, children or siblings, or spouse or surviving spouse of such persons. [See § 77-2004, RRS Neb.]

ii. Collateral relatives of the transferor (uncle, aunt, niece, nephew or spouse or surviving spouse of such persons. [See §77-2005, RRS Neb.]

iii. Entity controlled by any of the individuals described in A. i. and ii, above.

iv. An irrevocable trust in which any of the individuals described in A; i. and ii., above is a beneficiary

C. LIEN FOR MEDICAL ASSISTANCE REIMBURSEMENT

A. Applies to transfers of real estate during the transferor’s lifetime:

i. On or after the effective date of the Act,

ii. Irrevocably transferred,

iii. To a related transferee,

iv. For less than full consideration,

v. Subject to rights, actual or constructive possessors or powers retained by transferor,

vi. In a deed or other instrument.

B. Lien applies to medical assistance provided before, at the same time as, or after filing of a Notice of Lien.

C. Lien does not attach to any interest retained by the transferor.

D. Effect of lien

i. Effective upon filing of Notice of Lien.

ii. Not effective or valid if grantee is not a related transferee and DHHS must release upon notice from any bona fide purchaser.

iii. Priority

(1) Any mortgage or deed of trust filed before Notice of Lien is filed has priority over the lien;

(2) Optional future advances made to protect the security of the mortgagee/beneficiary are junior to the lien only if:

(a) Notice of lien is filed.

(b) Written notice of filing of lien received by mortgagee/beneficiary/assignee via certified mail.

iv. Deed Recital. The transfer document may contain Grantor’s recital that Grantee is not a related transferee, in which case the real estate is not subject to the lien. False recital results in personal liability of Grantor.

v. A related transferee may apply for a release or subordination of the lien and agree to indemnify DHHS for MAR. DHHS will either:

a. File a release with the Register of Deeds.

b. Not file an action to foreclose the lien within one year from delivery of notice. 

c. Required notice: Proof of delivery of notice by filing a copy of the notice and the certified mail receipt with the Register of Deeds.

III. TITLE ISSUES TO WATCH FOR

A. Legislative intent: It is the legislature’s intent that any debt arising for medical assistance be collected from the estate of a recipient of medical assistance before any portion of the estate of the recipient is enjoyed by or transferred to any heir, devisee, beneficiary, etc.The Act clearly and explicitly provides that the debt be recovered from the estate of a recipient.

B. “Estate” of a recipient: means, inter alia, any real estate or other asset in which the recipient had any legal title or interest at the time of death.

C. “Assets” include assets to be transferred to a beneficiary described as a “Related Transferee” (see above definition) at II); and assets conveyed or otherwise transferred to a survivor, heir, assignee, beneficiary, or devisee of the recipient through: 

1. Joint tenancy

2. Transfer on death deed

3. Survivorship

4. Conveyance of remainder interest

5. Retention of life estate

6. Estate for a period of years

7. Living trust

8. Other arrangement 

N.B.: Conveyances of real estate made prior to the effective date of the Act wherein the grantor retains a life estate or an estate for a period of time are not considered assets.

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