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.
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