Casualty & Estate Recovery - Tax Equity and Fiscal Responsibility Act (TEFRA)

What is TEFRA?

The Tax Equity and Fiscal Responsibility Act (TEFRA), governs liens that prevent the transfer of real property prior to a Medicaid recipient’s death for the purpose of avoiding estate recovery. Liens may be placed on a recipient’s home if the recipient is an inpatient of a medical facility such as a nursing home, intermediate care facility for the developmentally disabled, or other such medical institution, for at least six consecutive months and there is no reasonable expectation that they will return home.

 

FREQUENTLY ASKED QUESTIONS 

This FAQ is also available as a PDF for Download. 

 1.   What is a Real Property Lien? 

A Real Property Lien is a lien that may be placed on a permanently institutionalized individual’s real property if the value of the property was not counted as a resource when determining Medicaid eligibility.  The Medicaid recipient and personal representative or fiduciary will be served with a copy of the lien, and the lien will be filed with the County Clerk’s Office. 

This lien will be released if the recipient is discharged from the medical facility and returns home. If the property is sold instead, Medicaid will recover the costs of medical assistance provided to the date of the sale of the property against the sale proceeds. If the recipient passes away before the lien is satisfied or released, the real property becomes an asset of the recipient’s estate which is pursued under estate recovery. 

2.   What does Permanently Institutionalized mean? 

An individual is considered permanently institutionalized when they are an inpatient of a medical facility for at least six (6) months, and there is no expectation that they will return home.  Medical facilities include nursing homes, intermediate care facilities for the developmentally disabled, and other such medical institutions. 

3.   What happens if Medicaid places a real property lien after the recipient passes away? 

If a deceased recipient held interest in real property at the time of death, a lien may be placed on the real property for the Medicaid claim amount. This is to protect Medicaid’s interest to recover from the recipient’s assets or estate. No action is taken on the lien until the real property is sold.  

If there will not be enough proceeds from the sale to satisfy the Medicaid claim in full, the settlement or closing statement will be reviewed and a sale approval letter agreeing to accept the remaining balance in satisfaction of the lien may be issued. The lien will be released once payment is received for the approved amount. If a family member wishes to live in the real property rather than sell it, no recovery will be made until the title or deed is transferred and the recipient’s name is removed. 

4.   Why did I receive a letter from Health Management Systems (HMS)?  Who are they? 

New York State OMIG contracts with a vendor to perform certain casualty and estate recovery tasks. Currently, the vendor is HMS.  Their main office is currently located in Texas, but they also have offices in Albany, New York as well.  

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