Detailed Answer

Disclaimer: This article is for educational purposes only. It does not provide legal advice nor establish an attorney-client relationship.

Overview of Medicaid Estate Recovery in Indiana

When a Medicaid recipient in Indiana passes away, the state may seek to recover benefits paid on their behalf from their estate, including inherited real property. The Indiana Code §12-15-45 authorizes the Division of Aging to file claims against probate estates.

Step 1: Identification and Notice of Estate Recovery Claim

After the recipient’s death, the Division of Aging reviews Medicaid records to determine total benefits paid. It then files a claim in the probate court where the decedent’s estate is opened. The personal representative (executor or administrator) must receive a written notice of claim. This notice typically includes:

Amount of benefits paid.
Deadline to respond or contest the claim.
Contact information for the Division of Aging.

Step 2: Probate Court Proceedings

Once notice is filed, the claim enters the probate process:

The personal representative inventories all estate assets, including real property.
Heirs and interested parties receive notice of the Division’s claim.
The probate court schedules hearings on creditor claims.

Indiana’s probate rules require resolution of legitimate claims before distributing assets to heirs. If the Division’s claim is undisputed, the court approves the amount and places a lien on the real property.

Step 3: Opportunity to Contest or Seek Hardship Waiver

Indiana law allows objections to the estate recovery claim. The personal representative or heirs may:

File a written objection to the probate court within the time frame set by local rules (often 30–90 days).
Request a hearing to dispute the amount or validity of the claim.
Apply for an undue hardship waiver if recovery would cause significant financial distress to a surviving spouse or dependent. See IC §12-15-45-11 for waiver criteria.

Step 4: Estate Liquidation or Satisfaction of Lien

If the claim stands, the estate must satisfy it before distributing assets. Options include:

Sale of the inherited property. Proceeds pay creditors, including Medicaid.
Refinancing or loan against the property to pay the Medicaid lien.
Payment from other estate assets if beneficiaries wish to retain the property.

Step 5: Closing the Estate and Release of Lien

After full payment, the personal representative files proof of satisfaction with the probate court. Upon court approval, the lien is released and the estate closes. Remaining assets then pass to heirs under the will or Indiana’s intestacy laws (IC §29-1-2).

Helpful Hints

Open probate promptly. Delays can increase costs and reduce options.
Keep clear records of Medicaid benefits paid; this helps verify claim accuracy.
Consult an attorney experienced in probate and elder law to explore waivers and defenses.
Act quickly upon receiving the Division’s claim notice to preserve your rights.
Consider all estate assets before selling property; you may have alternative funds.