Quote-of-the-day mailing list
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Subject: qotd: Does your estate belong to Medicaid?
Date: Wed, 18 Dec 2013 13:32:54 -0800
From: Don McCanne <firstname.lastname@example.org>
To: Quote-of-the-Day <email@example.com>
Estate Recovery and Liens
State Medicaid programs must recover certain Medicaid benefits paid on
behalf of a Medicaid enrollee. For individuals age 55 or older, states
are required to seek recovery of payments from the individual's estate
for nursing facility services, home and community-based services, and
related hospital and prescription drug services. States have the option
to recover payments for all other Medicaid services provided to these
individuals, except Medicare cost-sharing paid on behalf of Medicare
Savings Program beneficiaries.
The Seattle Times
December 15, 2013
Expanded Medicaid's fine print holds surprise: 'payback' from estate
By Carol M. Ostrom
With an estimated 223,000 adults seeking health insurance headed toward
Washington's expanded Medicaid program over the next three years, the
state's estate-recovery rules, which allow collection of nearly all
medical expenses, have come under fire.
Medicaid, in keeping with federal policy, has long tapped into estates.
But because most low-income adults without disabilities could not
qualify for typical medical coverage through Medicaid, recovery
primarily involved expenses for nursing homes and other long-term care.
The federal Affordable Care Act (ACA) changed that. Now many more
low-income residents will qualify for Medicaid, called Apple Health in
But if they qualify for Medicaid, they're not eligible for tax credits
to subsidize a private health plan under the ACA, which requires all
adults to have health insurance by March 31.
Some 55- to 64-year-olds, who may have taken early retirement or who
were laid off during the recession, have found themselves plunged into a
low-income bracket. Unlike Medicaid recipients in the past — who were
required to reduce their assets to qualify — they're more likely to have
a home or other assets.
For health coverage through Medicaid, income is now the only financial
Around the country, the issue has sizzled away in blogs and commentaries
from both right and left.
California Advocates for Nursing Home Reform (a nonprofit 501(c)(3)
Medi-Cal Recovery Frequently Asked Questions (FAQ)
California's Medi-Cal applicants and beneficiaries are often confused
about their rights regarding Medi-Cal and are particularly concerned
that the state will "take" their homes after they die if they received
I. Can the State Take my Home If I Go on Medi-Cal?
The State of California does not take away anyone's home per se. Your
home can, however, be subject to an estate claim after your death. For
example, your home may be an exempt asset while you are alive and is not
counted for Medi-Cal eligibility purposes. However, if the home is still
in your name when you die, the State can make a claim against your
estate for the amount of the Medi-Cal benefits paid or the value of the
estate, whichever is less. Thus, if your home or any part of it is still
in your name when you die, it is part of your "estate" and can be
subject to an estate claim.
III. What Happens After I Die If I Received Medi-Cal?
After the Medi-Cal beneficiary's death, the State can make a claim
against the estate of an individual who was 55 years of age or older at
the time he or she received Medi-Cal benefits or who (at any age)
received benefits in a nursing home, unless there is a surviving spouse
or a minor, blind or disabled child. Thus, if there are any assets left
in the estate of the deceased beneficiary, Medi-Cal will seek to be
reimbursed for benefits paid. It is important to note that, even if you
received Medi-Cal at home, any benefits paid while you were 55 years of
age or older will be subject to Medi-Cal recovery.
IV. How Much Can the State Recover?
Managed Care: Estate claims can be much higher if the beneficiary is
enrolled in managed care. When a managed care beneficiary dies, the
estate will receive a claim for the total amount paid by Medi-Cal to the
managed care plan, regardless of how much the actual services cost the
managed care plan.
IX. How Do I Avoid an Estate Claim?
The best way to avoid an estate claim is to leave nothing in the estate.
Most Medi-Cal beneficiaries leave nothing but a home. If the property is
transferred out of the beneficiary's name during life, the state cannot
place a claim. Any transfer of real property can have tax consequences
that may outweigh a Medi-Cal estate claim. Currently, there are a number
of legal options (irrevocable life estates, occupancy agreements,
certain types of trusts) available to avoid probate, avoid tax
consequences and avoid estate claims. Anyone considering a transfer of
real property should consult an attorney experienced in the Medi-Cal
rules and regulations.
Comment: States are required to recover the costs of certain benefits
from the estates of Medicaid beneficiaries who received them. That is
not new. What is new is that the Affordable Care Act requires everyone
to be insured (with exemptions for hardship, immigration status, etc.),
and, if individuals are eligible for Medicaid based on income, they are
not allowed to use subsidies to purchase plans in the exchanges. Since
plans outside of the exchanges are unaffordable for individuals with low
incomes that qualify them for Medicaid, they are pretty much stuck with
enrolling in Medicaid.
Since Medicaid eligibility is determined by income and not by assets,
those who were able to purchase a home and build other assets, but have
retired at 55 or reduced their incomes for other reasons, are now
becoming part of a large pool that states can tap to recover Medicaid
expenditures. The states will be taking over estates that the deceased
had intended would go to their heirs.
The rules are complicated enough such that individuals concerned about
this potential transference to the state are advised to consult with an
attorney. Just what we need. More excessive administrative costs tacked
onto our wasteful system of health care financing.
Another annoyance is that many states are now forcing their Medicaid
patients into managed care organizations. Even though the individuals
may not have utilized much health care, the rules require that the
entire capitated payments made to the managed care organizations be
recovered from the estate. How ironic. The individual doesn't want
managed care but is forced into it, doesn't use it, and then his heirs
must pay through reduced vale of the estate the full managed care
premiums of a program the deceased would have avoided by remaining in
the fee-for-service Medicaid program.
As with so much in the Affordable Care Act, these issues are not simple.
Let's look just at how we finance health care, and how we tax estates.
If we had a single payer national health program, it would be financed
equitably based on ability to pay. You would not have the situation we
have now in which Medicaid spending is reimbursed by the estate whereas
Medicare spending is not. Everyone would contribute through progressive
financing of the universal risk pool, and everyone would receive
benefits based on medical need.
With the highly inequitable distribution of income and wealth that has
taken place within the past few decades, we have an imperative to
establish fairness in providing the government with the necessary
revenues to fulfill its functions. We have largely agreed that income
taxes need to be progressive, though many believe that we need tax
policies that would have very high income individuals contribute more
than is their current obligation.
But the issue of the Medicaid Estate Recovery Program should make us
look at how we tax wealth. Although most believe that very wealthy
individuals should pay higher estate taxes, we have here a situation in
which individuals with very small estates are having to pay what is, in
essence, an estate tax in the form of recovered Medicaid expenses. How
is that fair?
This is one more example of why we need to totally separate the funding
of our health care system from the delivery of health care services. A
single payer national health program - an improved Medicare for all -
would do precisely that.