Step-by-Step Guide: Hawaii Medicaid Estate Recovery Claim Against Inherited Property

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.

Detailed Answer

When a Hawaii resident who received Medicaid benefits passes away, federal law (42 U.S.C. §1396p(b)) and Hawaii law (HRS §346-54) authorize the Department of Human Services (DHS) to seek repayment from the recipient’s estate. If you inherit real property from such an estate, the DHS may file a claim against that property. Below are the typical steps involved under Hawaii law:

1. Identification of the Estate and Filing of a Claim

Within a reasonable time after the beneficiary’s death, DHS reviews its records to identify Medicaid expenditures paid on behalf of the decedent. The department then prepares a written claim against the probate estate or any other probate assets. This procedure is governed by HRS §346-54, which allows DHS to file a lien or claim on real property to recover unpaid Medicaid costs. HRS §346-54.

2. Recording the Notice of Claim or Lien

DHS records a Notice of Claim or Notice of Lien in the Bureau of Conveyances if the decedent owned real property in fee simple. This publicly alerts potential buyers or heirs that DHS has an interest in the property to secure repayment.

3. Probate Proceedings and Notice to Personal Representative

When the estate is probated under Hawaii’s Probate Code (HRS Chapter 560), the personal representative must notify all known creditors, including DHS, of the probate proceeding. The personal representative then files an inventory listing real and personal property assets.

4. Claim Review and Objections

The personal representative reviews DHS’s claim for accuracy. If the estate or heirs dispute the amount or validity of the claim, they can file an objection in probate court under HRS §560-3. Common objections include incorrect billing periods or improper valuation of property.

5. Settlement or Payment of the Claim

If no objection is filed or once the court resolves disputes, the personal representative allocates estate funds to satisfy the DHS claim. If the estate lacks liquid assets, the personal representative may negotiate a settlement or sell the property after obtaining court approval. Payment in full extinguishes the DHS lien.

6. Release of Lien

After DHS receives payment, it issues a Release of Lien. The personal representative then records this release in the Bureau of Conveyances to clear the title for heirs or purchasers.

Key Statutes and Regulations

Federal Medicaid estate recovery: 42 U.S.C. §1396p(b)
Hawaii estate recovery lien: HRS §346-54 (link)
Probate claims process: HRS §560-3 (link)

Helpful Hints

Begin with a full asset inventory early in probate to identify any liens promptly.
Keep communication open with DHS; early negotiation can minimize delays.
Understand statutory exemptions (e.g., surviving spouse, minor or disabled child) that may postpone or reduce recovery.
Consult with a probate attorney experienced in Medicaid estate recovery to explore hardship waivers or settlement options.
Document all communications and keep records of payments to DHS for your file.