Oct162025
Probate Q&A Series

Will Medicaid or Medicare seek reimbursement from my mother’s estate and how do I handle it? – North Carolina

Short Answer

Yes. In North Carolina, Medicaid may seek repayment from probate assets and may assert a lien against personal injury or wrongful death recoveries. Medicare must be reimbursed from liability settlements related to the decedent’s medical care and is not cut off by the estate claims deadline. Open the estate, classify each asset, publish notice to creditors (unless the only asset is a wrongful death claim), and resolve any Medicare/Medicaid claims before distributing funds.

Understanding the Problem

You need to open a North Carolina estate and qualify as administrator. You want to know whether Medicaid or Medicare can recover what they paid and what steps to take before you distribute property. You are the sole heir and there is no will. The decision point is whether, and how, public benefit payers can be repaid from the estate or related settlements before you close the estate.

Apply the Law

Under North Carolina law, the Clerk of Superior Court oversees estate administration. Creditors generally must present claims within the claims window triggered by the estate’s published notice. Certain assets pass outside probate and are not available to pay claims. Wrongful death recoveries are not estate assets, with narrow statutory allowances for burial and some medical expenses. Medicare has a federal right to reimbursement from liability settlements tied to medical care, and the State may assert Medicaid recovery both against third-party settlements and, in some cases, from probate assets. The United States’ claims (including Medicare) are not barred by the estate claims deadline.

Key Requirements

  • Open and qualify: Apply with the Clerk of Superior Court to be appointed administrator before handling assets.
  • Classify assets: Identify what is probate (e.g., sole bank accounts, vehicles) versus non-probate (e.g., life insurance with a named beneficiary).
  • Give creditor notice: Publish and mail the statutory Notice to Creditors after qualification, unless the only asset is a wrongful death claim.
  • Address liens and recoveries: Investigate and resolve Medicare conditional payments and any Medicaid lien/estate recovery before distribution.
  • Handle settlements correctly: Keep wrongful death funds separate; pay only allowed burial and capped medical expenses from those proceeds; seek necessary court approvals.
  • Wait to distribute: Do not distribute until the claims window closes and all Medicare/Medicaid obligations are satisfied or formally resolved.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The small bank account and the fully owned vehicle are probate assets. Publish the Notice to Creditors and wait for the claims period to run. The life insurance policy with a named beneficiary generally passes outside the estate and is not available to pay debts. For the pending personal injury recovery, if the funds are wrongful death damages, they are not estate assets and only limited burial and medical expenses may be paid from them; Medicare must still be reimbursed from those settlement funds, and Medicaid may assert a lien. If any portion is a survival/personal injury claim belonging to the estate, that portion is a probate asset subject to creditor claims, including any Medicaid estate recovery.

Process & Timing

  1. Who files: You (as prospective administrator). Where: Clerk of Superior Court, Estates Division, in the North Carolina county where your mother was domiciled. What: Application for Letters of Administration (AOC-E-202) with death certificate and preliminary inventory (AOC forms are on the N.C. Judicial Branch website). When: File promptly; after you qualify, publish the Notice to Creditors unless the only asset is a wrongful death claim.
  2. Request and verify liens: contact Medicare’s recovery contractor for a conditional payment amount and the N.C. Division of Health Benefits (through the local DSS or the State recovery unit) for any Medicaid lien or estate recovery claim. Plan for several weeks to receive final payoff figures.
  3. Resolve and document: keep wrongful death proceeds separate; pay allowed burial and approved medical expenses from those proceeds; satisfy Medicare/Medicaid claims as required; then file inventories/accounts with the Clerk and distribute remaining funds to heirs. Obtain the Clerk’s approval of your final account to close the estate.

Exceptions & Pitfalls

  • If the only asset is a wrongful death claim, you do not publish or mail the Notice to Creditors; still resolve Medicare and any Medicaid lien before distribution.
  • Do not commingle wrongful death proceeds with estate assets; the Clerk can require a separate accounting and must approve certain medical/burial payments from those proceeds.
  • Medicare’s reimbursement rights are federal and not cut off by the estate claims bar; do not distribute settlement funds until you have Medicare’s final demand and proof of payment.
  • Life insurance payable to a named beneficiary typically bypasses probate and is not available for estate creditors unless the estate is the beneficiary.
  • Medicaid recovery rules can defer or limit estate recovery in certain situations (for example, when a surviving spouse exists); confirm the specifics with the State before closing.
  • Mail notice to known creditors and retain proof; service or timing errors can delay closing and increase risk to the administrator.

Conclusion

North Carolina allows Medicaid to recover from certain probate assets and from liability settlements, and Medicare must be reimbursed from settlements tied to the decedent’s medical care. Classify assets correctly, publish the Notice to Creditors (unless only wrongful death proceeds exist), and resolve Medicare/Medicaid claims before distributions. Next step: file the Application for Letters of Administration with the Clerk of Superior Court and, after qualifying, publish the Notice to Creditors to start the claims window.

Talk to a Probate Attorney

If you’re dealing with Medicare or Medicaid reimbursement issues in a North Carolina estate, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Probate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.