Washington Medicaid Estate Recovery — Non-Probate Assets and How to Protect Them
Washington's Expanded Recovery Program
Most states only recover Medicaid costs from the probate estate — assets that pass through a will or intestacy. Washington goes further. Under WAC 182-527, the Health Care Authority recovers from both probate and non-probate assets. That includes joint tenancy properties, payable-on-death bank accounts, transfer-on-death securities, and assets held in living trusts.
For families where an adult child with a disability receives Apple Health or DDA waiver services, this expanded recovery changes how every asset in the family's financial plan needs to be structured.
What Gets Recovered
The state can file a claim against the estate of any Apple Health enrollee who was 55 or older when they received services, or who received nursing facility or other long-term care services at any age. The claim covers the total cost of medical assistance paid on the beneficiary's behalf.
Assets subject to recovery include:
- Real property held in joint tenancy or tenancy in common
- Bank accounts with payable-on-death designations
- Securities with transfer-on-death registrations
- Assets in revocable living trusts
- Life estate interests in real property
- Other non-probate assets covered by Washington's estate-recovery rules
The key point families miss: adding a child with a disability as a joint tenant on your home or naming them as a TOD beneficiary on a bank account doesn't protect the asset from estate recovery. It actually expands what the state can reach.
When Recovery Is Deferred
Recovery doesn't happen while certain protected individuals survive. Under federal and state law, estate recovery is deferred when there is:
- A surviving spouse
- A child under age 21
- A child of any age who is blind or disabled (as defined by SSA criteria)
This means if the Apple Health enrollee's family includes another disabled sibling, recovery is deferred for that sibling's lifetime. But "deferred" isn't "waived" — the claim attaches and can be pursued later when the deferral conditions no longer apply.
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How to Protect Family Assets
The most effective protection strategies involve restructuring how assets are titled and inherited:
Third-party special needs trust. Assets placed in a properly drafted third-party SNT funded by a parent or relative are never subject to Medicaid estate recovery, because the funds were never the beneficiary's assets. This is the single most important tool for families planning an inheritance.
Life insurance payable to a trust. Instead of naming the adult child as a life insurance beneficiary (which puts the proceeds directly in their name, creating a first-party asset), name a third-party SNT as the beneficiary.
WA ABLE account with limits. ABLE accounts are subject to Medicaid payback upon the beneficiary's death — but only for costs incurred after the account was opened. For small savings amounts, ABLE accounts may be the pragmatic choice even with recovery exposure.
Avoid leaving assets directly to the beneficiary. A direct inheritance — even through a will — becomes the beneficiary's own asset and can affect means-tested SSI or Apple Health eligibility. Consider routing inheritances through a third-party SNT instead; if the beneficiary already owns the funds, get advice about first-party options such as an SNT, DDETF, or WA ABLE account.
Undue Hardship Waiver
Washington allows an heir to ask the Health Care Authority to delay recovery for "undue hardship" under WAC 182-527-2750. The rule lists narrow circumstances, including when the property is the heir's sole income-producing asset, recovery would deprive the heir of shelter they cannot afford to replace, or the client is survived by a state-registered domestic partner.
If you believe undue hardship applies, ask the Health Care Authority to delay recovery and provide documentation of the applicable circumstance. The notice explains how to request an administrative hearing if HCA denies the request.
Planning Early Matters
The worst time to learn about Washington's expanded estate recovery is after a parent dies. By then, asset titling decisions made decades earlier have already determined what the state can reach.
The Washington SSI at 18 & Adult Disability Benefits Guide covers the estate recovery rules alongside special needs trust planning and WA ABLE strategies, so families can coordinate their approach while there's still time to restructure.
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