(A) The State Department of Health and Human Services shall seek recovery of medical assistance paid under the Title XIX State Plan for Medical Assistance from the estate of an individual who:

1. (1) at the time of death was an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution if the individual is required, as a condition of receiving services in the facility under the state plan, to spend for costs of medical care all but a minimal amount of the person's income required for personal needs; or
2. (2) was fifty-five years of age or older when the individual received medical assistance, but only for medical assistance consisting of nursing facility services, home and community-based services, and hospital and prescription drug services provided to individuals in nursing facilities or receiving home and community-based services.

(C) Recovery under this section must be waived by the department upon proof of undue hardship, asserted by an heir or devisee of the property claimed pursuant to 42 U.S.C. 1396p(b)(3). Until conflicting hardship standards and criteria are issued by the Secretary of the United States Department of Health and Human Services, the following are considered instances of undue hardship in which recovery must be waived:

1. (1) with respect to the decedent's home property, if the decedent could have transferred the home property on or after the date of his or her Medicaid application without incurring a penalty under 42 U.S.C. Section 1396p(c), if the property could have been transferred without penalty to a:

   1. (a) spouse who has survived the decedent;
   2. (b) surviving child of the decedent who was under age twenty-one or blind or totally disabled;
   3. (c) surviving sibling of the decedent who possessed an equity interest in the property and who lived in the home for a period of at least one year immediately prior to the date the decedent was institutionalized; or

   4. (d) surviving child of the deceased who lived in the home for a period of at least two years immediately before the decedent became institutionalized and who provided care which allowed the decedent to delay institutionalization.

      However, hardship under this item only applies if the individual to whom the property could have been transferred without penalty is actually residing in the home at the time the hardship is claimed and this hardship status only protects up to one hundred thousand dollars of appraised value of the home property and to the extent the appraised value of the home property exceeds one hundred thousand dollars, that portion of the value that exceeds one hundred thousand dollars, is subject to recovery by the department as otherwise authorized under this section.

2. (2) with respect to the decedent's home and one acre of land surrounding the house, if an immediate family member:

   1. (a) has resided in the home for at least two years immediately prior to the recipient's death;
   2. (b) is actually residing in the home at the time the hardship is claimed;
   3. (c) owns no other real property or agrees to sell all other interest in real property and give the proceeds to the department; and
   4. (d) has annual gross family income that does not exceed one hundred eighty-five percent of the federal poverty guidelines.

3. (3) with respect to an income producing asset:

   1. (a) the spouse's or immediate family member's annual gross family income would fall below the federal poverty guidelines without the income produced by the asset; and
   2. (b) at the time of death, the asset is not producing annual income in excess of one hundred eighty-five percent of the federal poverty guidelines or the spouse or immediate family member agrees to pay all income in excess of one hundred eighty-five percent of the federal poverty guidelines to the department until the department recovers all medical assistance due under this section.

(F) For purposes of this section:

1. (1) "estate" means all real and personal property and other assets included within the individual's estate as defined in Section 62-1-201(11);
2. (2) the "state plan" means Title XIX State Plan for Medical Assistance in effect at the decedent's death;
3. (3) "immediate family member" means a child, parent, brother, or sister of the deceased.

(G) Notwithstanding subsection (A)(2) upon the enactment of any amendments to federal law which grants states the option to exempt home and community-based services or other noninstitutional Medicaid services from the estate recovery provisions mandated by Section 13612 of the federal Omnibus Budget Reconciliation Act of 1993, the State Health and Human Services Finance Commission shall seek recovery of medical assistance paid under the Title XIX State Plan for Medical Assistance from the estate of an individual who:

1. (1) at the time of death was an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution if the individual is required, as a condition of receiving services in the facility under the state plan, to spend for costs of medical care all but a minimal amount of the person's income required for personal needs; or
2. (2) was fifty-five years of age or older when the individual received medical assistance but only for medical assistance consisting of nursing facility services.