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Bill Filed to Repeal Medicaid Estate Recovery!

Medicaid-estate-recovery-MA-Margolis-Bloom-Dagostino-Wellesley

We’ve often written about the unfairness of Medicaid estate recovery, that it strikes those least able to afford it. Now, Representative Jan Schakowsky (D-IL) has introduced “The Stop Unfair Medicaid Recoveries Act” to repeal it. Her bill is supported by California Advocates for Nursing Home Reform,
Justice in Aging, the National Academy of Elder Law Attorneys, the National Health Law Program, Consumer Voice for Quality Long-Term Care, and the Western Center on Law & Poverty
.

What is Medicaid Estate Recovery

The federal Medicaid (called MassHealth in Massachusetts) program requires every state to seek recovery for all payments made for nursing home care and for any care after age 55 from the estates of beneficiaries. Almost always these claims are made against the family home because that’s the only substantial asset Medicaid beneficiaries are entitled to keep and qualify for coverage.

Why It’s Unfair

On the surface, the Medicaid estate recovery seems to make sense. Medicaid costs strain state budgets. It makes sense to permit beneficiaries to keep their homes during their lives, but after they’re gone their need for housing no longer exists. So the home equity is a good way for beneficiaries to contribute to their cost of care.

But the reality is that system unfairly and unevenly impacts those families least able to afford to pay. Here are some of the reasons:

Luck-of-the-draw. Whether a Medicaid beneficiary’s home will be subject to estate recovery depends on luck as much as anything else. For instance, if a married couple owns a house in joint names or as tenants by the entirety (a form of ownership only available to married couples), and one spouse goes to a nursing home and is covered by Medicaid, the house will not be subject to claim if that spouse dies first. At that point, the entire ownership will pass entirely to the healthy spouse living at home and it will not be subject to claim. If, on the other hand, the “community” spouse dies first, the house will then pass to the spouse in the nursing home and be subject to estate recovery. This is just one example of how the whims of fortune can have a huge impact on the result.

People with more resources avoid claims. Individuals with more resources and sophistication are more likely to engage in planning to avoid Medicaid estate recovery, resulting in those with fewer resources and less sophistication being more likely to lose their homes to claim. Using the above example, when one spouse is receiving nursing home care and the other is still residing at home, the standard advice from elder law attorneys is that the house be transferred into the healthy spouse’s name and that they execute an estate planning the ensures that it does not go back to the nursing home spouse in the unlikely event that the better-functioning spouse dies first. They can either disinherit the nursing home spouse, giving the house and their other assets to their children or other beneficiaries, or they can create a trust in their will for the nursing home spouse. Either approach would protect the home from Medicaid estate recovery. This is just one example of how planning can protect homes. It should come as no surprise that people with more resources are also more likely to engage elder law attorneys and those with fewer financial resources are less likely to feel comfortable paying legal fees.

Restrictive hardship provisions. All Medicaid estate recovery programs are required to have provisions for waivers in the case of hardship. Up until recently, the MassHealth waiver provisions were so narrow and the requirements and deadlines for qualifying so strict that very few people inheriting homes of MassHealth beneficiaries were able to qualify. In 2021, MassHealth made significant reforms to its waiver rules both broadening the criteria for qualifying and easing the process. According to a report of the Blue Cross Blue Shield Foundation of Massachusetts, after this reform the number of family members qualifying for the waiver more than doubled from just 14 on average prior the change to 157 in 2022. One only wonders how many thousands of Massachusetts families who experience hardship did not qualify over the decades before this reform and how many still do not qualify in Massachusetts and nationwide due to continuing hurdles imposed by state Medicaid agencies.

Undermines wealth transmission for poorer families. It almost goes without saying that it’s more difficult for less wealthy families to accumulate wealth and pass it on to their heirs. These are the same families that are more likely to have to rely on Medicaid to pay for long-term care. And minority Americans are more highly represented among poorer American families than are white Americans. Medicaid estate recovery is one of many barriers poorer Americans face in the creating of intergenerational wealth and it is, perhaps, the easiest one to eliminate. As Rep. Schakowsky says, “Medicaid is the only public benefit program that requires states to seek repayment for long-term care services. In many cases, Medicaid estate recovery keeps families in poverty and forces seniors and disabled individuals to forego care. Further, Medicaid estate recovery disproportionately harms low-income, blue-collar families and communities of color.”

What You Can Do to Help the Cause

Rep. Schakowsky has taken an important first step towards eliminating Medicaid estate recovery by filing her bill. So far her co-sponsors include one Massachusetts congresswoman, Rep. Lori Trahan. You can learn more about the legislation here. Please read up and then contact your member of congress and Senators Elizabeth Warren and Ed Markey to urge that they co-sponsor the bill as well. You can find their contact information here (for members of congress) and here (for senators).

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