Much of the long-term care planning elder law attorneys engage in for clients is aimed at protecting the family home from Medicaid estate recovery, the obligation of state Medicaid agencies to recover from the estates of deceased beneficiaries the cost of health care paid for during their lives.
Almost be definition, this claim falls on smaller estates. This is because the family home is the only substantial assets Medicaid (MassHealth in Massachusetts) beneficiaries may keep and receive benefits. Further, more affluent applicants and those more comfortable dealing with lawyers are more likely to engage in planning to avoid estate recovery.
Growing Movement to End Medicaid Estate Recovery
There has been much writing recently about the racial wealth gap and the challenges Black and other minority families have building generational wealth. Medicaid estate recovery is one of the factors undermining the ability of lower-income families to pass on savings from one generation to the next.
As a result, the Blue Cross Blue Shield of Massachusetts Foundation has issued a report calling on MassHealth to take what steps it can under federal law to limit the effects of estate recovery here. On the national level, Representative Jan Schakowsky (D-IL) has introduced “The Stop Unfair Medicaid Recoveries Act” to repeal Medicaid estate recovery entirely.
Now, the Robert Wood Johnson Foundation has given a grant to the NAELA Foundation (the charitable arm of the National Academy of Elder Law Attorneys) and Justice in Aging (a national non-profit legal advocacy organization that fights senior poverty) to fund research, education and advocacy around the effects of Medicaid estate recovery.
MACPAC Report
In fact, Medicaid and CHIP Payment and Access Commission (MACPAC), a non-partisan agency that advises Congress on Medicaid policy, has already recommended that Congress take significant steps to reform Medicaid estate recovery, including:
- Making estate recovery optional for states rather than mandatory.
- Setting standards for hardship waivers, including a minimum estate value for estate recovery.
Results of Kansas Audit
A recent audit of the Kansas estate recovery program by the Office of the Inspector General of the Department of Health and Human Services found that:
- During the fiscal years 2020 through 2022, Kansas estate recovery spent $5 million to collect $37 million.
- Kansas could have collected more if it had run its program more efficiently.
As a result, the OIG determined that the Kansas estate recovery program is cost effective and could be made even more effective.
But the audit also drilled down on 30 Kansas estate recovery cases. According to Justice in Aging’s analysis of these cases, the state recovered just $162,298 for these cases against spending of $6 million on these beneficiaries’ health care, or just 2.7% of incurred health expenses. Further, none of these 30 Kansas Medicaid beneficiaries left more than $100,000 in assets, 25 left less than $11,000, and the median remaining asset value was $1,532.
The question is whether these are the types of estates against which state Medicaid agencies should be seeking to recover their costs. (You know my answer.)