Mortgages and Medicaid Liens: Which Is Paid First? Part 1: The Medicaid Lien

HNWReal Estate, Landlord/Tenant, and Zoning

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Medicaid Attorney

A client came to see me seeking to move in with her mother, who is receiving home based Medicaid long term care.  She wants to renovate her mother’s home, and seeks to record a mortgage against the home for the cost of renovating the home.  When her mother dies, and the estate is paying the claims of the mother, she wants to know if she will get paid.

Before I attempt to answer the question, I want to quickly discuss estate recovery and New Jersey Medicaid.  After Medicaid pays for services, the state will attempt to recover the monies it paid out when the person dies.  While the state is willing to provide for services, it believe everyone should be required to pay it back for the money it spent providing for long term care.  It is in this context that Medicaid will attempt to place a lien on an estate and get back what it paid out for you.

There are four different times where Medicaid will not seek a lien against you.  The first is if your family situation and estate do not qualify for a lien to be placed against you.  There are two family requirements to file a lien and two estate requirements.  The decedent must not have a surviving spouse or surviving children under the age of 21 or children who are blind or permanently disabled (as established by the NJ Office of Disability Services).  The lien also must be in excess of $500 and the decedent’s estate must also be larger than $3,000.  If your loved one meets these four requirements, the estate may be subject to a lien.

Even if you are eligible, Medicaid may not come after your property.  It can decide (at its sole discretion) that Estate recovery is not worth pursuing, though it would generally give you a reason why, such as the time to pursue the cost would waste too many state resources.  Your estate can also make a claim that a lien would cause an undue hardship amongst the beneficiaries such that their only income-producing asset would cause one of these beneficiaries to be eligible for public assistance.  You have to go through a fair hearing to prove this, and you have to prove that your beneficiaries are not eligible for public assistance because of the way the will and trust are set up.

The last area where Medicaid will not pursue a lien is if a family member of the deceased beneficiary moves into the house and continuously resides there with the individual who received Medicaid.  In that case, a lien is recorded against the house, but never pursued until the beneficiary sells the house, voluntarily moves out, dies, or vacates the property.  This means in our situation, should the daughter move in and live there continuously prior to her mother’s death, Medicaid won’t enforce the lien against her until she leaves the house.  But that doesn’t address the issue of paying the mortgage should Medicaid decide to enforce its lien.  Stay tuned for my next post on this topic.

To discuss your NJ Medicaid matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at  Please ask us about our video conferencing consultations if you are unable to come to our office.

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