Kansas State University


Issues in Health Reform

Month: August 2014

Medicaid cost recovery through payback from the estates of the deceased

Recovering costs from the estates of the deceased for Medicaid funds spent on long term (institutional) care has been a federal requirement for many years.  This has allowed the public to recoup usually extraordinary costs (average $80,000 annually) and have money to pay for future Medicaid recipients.


Because of those extraordinary costs of nursing home care, it is not surprising that Medicaid becomes the major payer even in circumstances when one was middle class and may have owned property.  To be eligible for Medicaid one must have less than some small amount of assets, usually about $2000 cash (or spend down to that amount).  A spouse can continue to live in the family home but when that surviving spouse also dies, then that property can be sold and cashed out to repay Medicaid. For some this comes as a surprise. Some financially savvy older adults (often at the urging of their adult children) learn how to divest their estates over time so that there is no estate property left in the older adults’ name for the state to come back and claim.  Whether or not we think that is an ethical practice, it is a legal one if done over time, years before a person may actually need nursing home care.


So, what is all the new news about?  In most states, Medicaid only paid for children, adults over 65 or the disabled in institutional settings.  With the expansion of Medicaid as part of the Affordable Care Act, states that have expanded their Medicaid eligibility are now paying for more than nursing home medical costs for large numbers of adults.  Ten of those states have their own laws that require the reimbursement of the Medicaid program from the estates of the deceased for adults over 55 who were receiving Medicaid even for regular medical care service costs.  The large expansion of the Medicaid population to cover children and adults under 65 in states with those laws put the estates of those over 55 in jeopardy.  This makes the Medicaid program that pays for medical expenses now a defacto short term loan program, with the family house being held as collateral.


Medicaid seems to be pretty alone as a publicly sponsored program that recoups costs from a former recipient’s estate.  The unfortunate consequence of what might be fiscally sound policy is that is discourages those who need medical care from receiving it, countering the major intent of extending insurance.  That intent was to remove the financial barrier to seeking care especially for those of lowest income who were likely delaying much needed medical attention.  As adults over 55 in those states find out about this caveat they are avoiding using Medicaid as a payer of their medical care so that they can at least bequest their houses to their intended beneficiaries.  Complicating this is that those on Medicaid rarely receive any bills so they have no way of knowing how much the program has paid on their behalf, nor how much their estate may owe upon their deaths.


Now that the cadre of those qualifying for Medicaid and needing medical services rather than institutional home care grows, it will be interesting to see how states with those repayment laws address this.  Also interesting will be the public discussion about what exactly an assistance program is and when is it appropriate to require payback, as if the assistance were only a loan.

How the health care law is making a difference for the people of Kansas

A report issued by the Department of Health and Human Services details how the people of Kansas are faring after the implementation of the Affordable Care Act (ACA/Obamacare).  The full report can be found here:  http://www.hhs.gov/healthcare/facts/bystate/ks.html

It is written by the administration so the tone is favorable.  The report has a section that details who is now insured through the Kansas Health Insurance Marketplace (the Kansas Exchange).  Over 57,000 selected plans in that marketplace.  And, as for the national average, almost 80% of 57,000 are receiving financial assistance paying for the premiums.

States have a choice as to whether or not to expand their Medicaid programs.  Kansas is one of 24 states that have chosen not to expand at this time.  Still, because of heightened interest in health insurance, over 28,000 Kansans have been newly enrolled in the Kansas Medicaid program, KanCare.  If Kansas had expanded there would be another 100,000 eligible.

The report goes on to give additional detail about new coverage benefits and how many Kansans are affected.  It also acknowledges that in Kansas, Medicare beneficiaries have save over $100 million on prescription drugs because of new cost sharing in that program.