Medicaid Estate Recovery and its Connection to Obamacare

Final expenses is taking on a new meaning that may not have been included in the estate planning of most people. I can see why this law was enacted because of the potential for Medicaid fraud and especially when people are retired and facing increased medical costs. But this is a more critical issue with the launch of the Affordable Care Act. If you’re one of the millions of people who thinks Medicaid is a free program – should read on for more details.

Did you know that the government can go after your estate after you die to recoup money spent through Medicaid? I didn’t until today. Seems to me – they could eliminate the need for this program – if they had more stringent policies in place for people to qualify for Medicaid. And, with the changes in Medicaid with Obamacare – likely this will happen more often. Here are some details from the US Health and Human Services website –

INTRODUCTION

Medicaid imposes stringent limits on income and assets of recipients, consistent with its mission to provide a health care safety net for the poor and for those whose personal resources are insufficient to pay the full cost of care. In order to fulfill this mission, Medicaid also recovers expenses paid on behalf of recipients from their estates under certain circumstances. Medicaid is the largest source of funds for institutional long-term care expenses. It pays nearly half of the total amount spent on nursing homes, followed, respectively, by out-of-pocket funds of long-term care consumers, Medicare, private long-term care insurance, and other public and private funding sources.1

Unless they are among the minority who have long-term care insurance, individuals contemplating paying thousands of dollars out-of-pocket every month for long-term nursing home care face the possibility of exhausting all available assets and using up their lifetime savings before being able to qualify for Medicaid. Not surprisingly, a web search on “Medicaid estate planning” yields thousands of results offering advice on a variety of strategies to qualify for Medicaid while preserving assets and savings for heirs.

Highlights of the 1993 Estate Recovery Mandate:

States must pursue recovering costs for medical assistance consisting of:

  • Nursing home or other long-term institutional services;
  • Home- and community-based services;
  • Hospital and prescription drug services provided while the recipient was receiving nursing facility or home- and community-based services; and
  • At State option, any other items covered by the Medicaid State Plan.

At a minimum, states must recover from assets that pass through probate (which is governed by state law). At a maximum, states may recover any assets of the deceased recipient.

View the full page here – http://aspe.hhs.gov/daltcp/reports/estaterec.htm

Download a PDF of the page here – http://aspe.hhs.gov/daltcp/reports/estaterec.pdf

The Seattle Times printed an article about this in connection with Obamacare since the Medicaid program in Washington was enlarged as part of the “Affordable Care Act”

Expanded Medicaid’s fine print holds surprise: ‘payback’ from estate after death

Unpleasant surprise

People in their 50s and 60s make up about 30 percent of the adults who have signed up for health insurance through Washington’s exchange marketplace, and about 18 percent of adults who have enrolled in health insurance through Apple Health.

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 requirement.

….

Dr. Jane Orient, executive director of the politically conservative Association of American Physicians and Surgeons, writing in the The Washington Times, called the recovery provision “a cash cow for states to milk the poor and the middle class.”

“People will think this is wonderful, this is free insurance,” Orient said in an interview. “They don’t realize it’s really a loan, and is secured by any property they have.”

Even states that are now limiting estate recovery, she warned, can change the rules again if budget problems become more intense.

Unclear rules

One reason this snafu has become so troublesome is that ACA rules appear to give those who qualify for Medicaid little choice but to accept the coverage.

People cannot receive a tax credit to subsidize their purchase of a private health plan if their income qualifies them for Medicaid, said Bethany Frey, spokeswoman for the Washington Health Benefit Exchange.

But they could buy a health plan without a tax credit, she added.

For someone age 55 to 64 at the Medicaid-income level — below $15,856 a year — it’s quite a jump from free Medicaid health insurance to an unsubsidized individual plan. Premiums in King County for an age 60 non-tobacco user for the most modest plan run from $451 to $859 per month.

View the full article here – http://seattletimes.com/html/localnews/2022469957_medicaidrecoveryxml.html

 

 

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