According to a new report from AARP, family members caring for loved ones provide an estimated $600 billion in unpaid services each year. They often sacrifice their time, money, and, in many cases, their well-being. As Congress debates a bill to provide a tax credit for family caregivers, determining how much that time is worth is proving tough. However, there is another aspect of Medicaid that is often overlooked: estate recovery.
The LoGrande found this out the hard way. As Salvatore LoGrande was dying from cancer, his children wanted to keep him in the white, pitched-roof house he worked so hard to purchase decades before.
Sandy LoGrande thought it was a mistake when, a year after her father’s death, Massachusetts billed her $177,000 for Medicaid bills and threatened to sue for his home if she didn’t pay up soon.
Sadly, it wasn’t a mistake. Rather, it was part of a standard process required by the federal government of all states: recovering money from the assets of deceased persons who, in their final years, relied on Medicaid.
LoGrande says that’s how she wound up in a two-year court battle with Massachusetts following her father’s death. Several years before his death in 2016, she sought guidance on caring for her elderly father from a local organization. The organization suggested that she sign him up for Medicaid. She also remembered inquiring about the house, but was told that the state would only take it if her father was sent to a nursing home. “He never would have signed on with anything that would put his home in jeopardy,” she said.
The recovery of certain Medicaid costs after an enrollee dies (estate recovery), which was established to provide another source of Medicaid funding and promote program integrity, has been criticized for several reasons. Estate recovery primarily affects low-income individuals, generates little revenue, and is applied very unevenly across states.
Family members may be unaware of the policy at the time of enrollment and later discover that the family home may be repossessed after a loved one passes away. Such complaints have prompted Democrats, Republicans, and the Medicaid and CHIP Payment and Access Commission (MACPAC) to propose changes to or limitations on estate recovery.
In March, a Democratic lawmaker proposed ending the “cruel” program entirely. Critics contend that the program takes only around 1% of the more than $150 billion that Medicaid spends on long-term care each year. They also contend that many states neglect to advise those who sign up for Medicaid that they may face large costs and property claims after their death.
Estate recovery is primarily a process for older Medicaid members who receive long-term services and supports (LTSS). To be eligible for Medicaid coverage of LTSS, people must typically demonstrate having limited incomes (typically less than $3,000 per month in 2024 for an individual) and financial resources (often less than $2,000 for an individual), though some assets, including their home, are excluded from the calculation of financial resources.
Many people only qualify after depleting their assets to cover LTSS out-of-pocket costs, which can easily reach $100,000 per year. The 1993 Omnibus Budget Reconciliation Act required state Medicaid programs to recover the expenses of specific Medicaid benefits through a procedure known as estate recovery.
According to a 2021 report from the Medicaid and CHIP Payment and Access Commission, which makes policy recommendations to Congress, state rules regarding the recovery process differ greatly. Some states will place a lien—a legal right—on a residence, while others will not. Meanwhile, some Medicaid offices attempt to recover all medical expenses from individuals, such as doctor visits or medications, while others only seek reimbursement for long-term care.
In recent years, Alaska and Arizona pursued only dozens of properties. Other states pursued thousands of homes for hundreds of millions of dollars. According to a Dayton Daily News investigation, New York and Ohio led the country in such collections, recovering more than $100 million in a single year.
In Tennessee, which recovered more than $38.2 million from over 8,100 estates last year, Imani Mfalme found herself in a similar situation after her mother died in 2021. Mfalme continued to care for her mother, whose early-onset Alzheimer’s disease progressed. But in 2015, when Mfalme was diagnosed with breast cancer and required a double mastectomy, she began to consider alternative treatments.
She had a meeting with the local Medicaid office at her mother’s home. The representative instructed her to deplete her mother’s bank accounts, which Mfalme had put toward the cost of assisted living for her mother, so that her mother might qualify for the program.
She recalls feeling slightly irritated during the meeting when the representative asked her three times, “This is your mother’s home?” Mfalme said the salesperson made no mention of the possibility of having to sell the house to pay her mother’s Medicaid debt after she died.
Tennessee’s Medicaid office now says she owes $225,000, and the state is seeking a court order requiring Mfalme to sell her home to repay the debt.
Mfalme, 42, stated that she wants to pay what she can, but the house is a particular source of concern. Her mother, a Black woman, bought her dream home in Knoxville after winning a landmark discrimination lawsuit against her former employer, Boeing, for underpaying her compared to her male colleagues.
In a gridlocked Congress, where some Republicans want to cut Medicaid entitlements, the bill is unlikely to receive the bipartisan support required to become law.
At least one person admits the rule isn’t working: the man who created it.
Many people are unaware of the decades-old law, which was designed to push people to save for long-term care or risk losing their home’s equity, according to Stephen Moses, who now works for the conservative Paragon Health Institute.
Estate recovery is an overwhelming burden for Medicaid beneficiaries and their families. No one should lose their home in order to qualify for Medicaid. While Medicaid is a life-changing program, it also traps people in poverty.
Sources:
Blizzard, Nick. “Ohio More Aggressive than Other States in Going after Estates from Medicaid Recipients.” Dayton Daily News , Cox Enterprises, Inc., 17 Aug. 2023, http://www.daytondailynews.com/local/ohio-more-aggressive-than-other-states-in-going-after-estates-from-medicaid-recipients/JU24UDRTDFGHNJQS5FPULZSQJU/.
“Medicaid Estate Recovery: Improving Policy and Promoting …” Medicaid and CHIP Payment and Access Commission, Medicaid and CHIP Payment and Access Commission, 1 Mar. 2021, http://www.macpac.gov/wp-content/uploads/2021/03/Chapter-3-Medicaid-Estate-Recovery-Improving-Policy-and-Promoting-Equity.pdf.
Mohamed, Maiss, and Alice Burns. “What Is Medicaid Estate Recovery?” KFF, KFF , 13 Sept. 2024, http://www.kff.org/medicaid/issue-brief/what-is-medicaid-estate-recovery/.
Seitz, Amanda. “State Medicaid Offices Target Dead People’s Homes to Recoup Their Health Care Costs.” AP News, AP News, 18 Mar. 2024, apnews.com/article/medicaid-estate-recovery-nursing-homes-65d5e637e19dc27bd1bd3b097d239b53.
Span, Paula. “When Medicaid Comes after the Family Home.” The New York Times, The New York Times Company , 16 Mar. 2024, http://www.nytimes.com/2024/03/16/health/medicaid-estate-recovery-seniors.html.