TL/DR –
The US federal government requires every state to recover money from the assets of deceased individuals who relied on Medicaid, a taxpayer-funded health insurance for low-income Americans, during their final years. The home of the deceased, however, is subject to the estate recovery process if the individual was above 55 and used Medicaid for long-term care such as nursing homes or in-home health care. Critics of the recovery program argue that it collects too little, approximately 1% of the over $150 billion Medicaid spends yearly on long-term care, and many states fail to inform people signing up for Medicaid about the potential claims on their property after death.
Sandy LoGrande Fights for Her Father’s Home
In the aftermath of her father, Salvatore LoGrande’s, fight with cancer, Sandy LoGrande found herself embroiled in a legal battle with Massachusetts over their demand for $177,000 to cover her father’s Medicaid expenses. The state threatened to sue for her father’s home if she couldn’t pay off the debt quickly.
Medicaid Estate Recovery Process
The bill was part of a routine procedure required by the federal government, aiming to recoup funds from the estate of deceased Medicaid dependents. Although a person’s home is usually exempt during Medicaid qualification, it can be claimed in the estate recovery process for those who were over 55 and used Medicaid for long-term care.
Proposal to Terminate Estate Recovery
Recently, a Democratic lawmaker proposed ending the program, calling it “cruel”. Critics argue that the program collects too little, roughly 1%, of the more than $150 billion Medicaid spends annually on long-term care. They also believe states fail to warn people signing up for Medicaid about potential future claims on their property.
The Impact of Estate Recovery
LoGrande’s ordeal highlights the impact of this system. After her father’s death, she faced a two-year legal battle with Massachusetts. Although her father had signed up for Medicaid, she argued that he had been reassured that his home would not be at risk. Following her father’s death, she received the first Medicaid expense bill, sparking her dispute with the state. The state eventually released its claim on the house in 2019.
Varied State Policies
Policies regarding this recovery process differ from state to state, according to a 2021 report from the Medicaid and CHIP Payment and Access Commission. Last month, the Blue Cross Blue Shield Foundation of Massachusetts called for an overhaul of the state’s process due to its potential to perpetuate wealth disparities and intergenerational poverty.
Calls to Reverse the Law
The Medicaid and CHIP Payment and Access Commission’s report recommended that Congress reverse the 1993 law that required states to recover money from estates, instead making it optional. Democratic Rep. Jan Schakowsky of Illinois reintroduced legislation that would end the federal government’s mandate. However, in a gridlocked Congress, the bill is unlikely to gain the necessary bipartisan support to become law.
The Origin of the Rule
Stephen Moses, who originally crafted the rule, noted that the mandate was created to encourage people to save for long-term care — or risk losing the equity from their home. The goal was to ensure that people could get the long-term care they needed while avoiding reliance on public health care programs.
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