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New Report Calls for Reform of MassHealth Estate Recovery


We have previously argued for the elimination of MassHealth estate recovery due to its inequitable application. To do away with it completely would require a change in federal legislation. In the meantime, however, the Blue Cross Blue Shield of Massachusetts Foundation has issued a report, “Holding on to Home: A Primer on MassHealth Estate Recovery and Options for Reducing its Impact on Members and Families,” calling for reform of the estate recovery system in Massachusetts in ways that are permissible under federal law.

The federal Medicaid rules require states to recover the cost of care they provide from the estates of beneficiaries. This is commonly referred to as “estate recovery.” States must seek recovery for benefits paid for home and community based long-term care services paid on behalf of decedents after they had reached age 55 and for the costs paid for nursing home care at any age.

Estate Recovery Primarily Affects Low-Income Families

Almost by definition, estate recovery only impacts the estates of low-income residents and almost always affects the ability of families to keep the family home, thus interfering the with transmission of intergenerational wealth of those with few resources. The reason that this is the case has to do with the income and asset limits for Medicaid eligibility (MassHealth in Massachusetts) and the fact that the only significant asset recipients may keep is the family home. For the most part, liquid assets must be spent down to just $2,000 (a figure that has remained the same since 1989).

As the report explains, “In Massachusetts, a large majority of MassHealth members have incomes far below the federal poverty level. In 2018, nearly 70 percent of MassHealth members over the age of 65 had income at or below 86 percent FPL, which was $17,871 for a family of three. A home is often the only valuable asset for a Medicaid-eligible adult, and home equity for Medicaid members is modest.” MassHealth beneficiaries are also more likely to have physical or behavioral disabilities and to be people of color than are non-beneficiaries.

Estate Recovery in Massachusetts

In one significant way, Massachusetts rules are more lenient than those in some other states. MassHealth only seeks recovery against the probate estates of beneficiaries, not against non-probate property, such as property in life estates or joint names. But this leads to unequal and haphazard application of the rules. A home that happens to be in the names of the MassHealth beneficiary and a spouse, child or sibling will not be subject to claim, but one in the beneficiary’s sole name will be. Those beneficiaries who engage in planning with elder law attorneys, such as us, can often structure their assets in ways to avoid estate recovery, while those who do not — who may have less resources or be less sophisticated — do not.

In 2021, MassHealth revised its estate recovery rules to make it easier for lower-income heirs to seek hardship waivers. The previous rules and been draconian in terms of the hoops they had to jump through to gain waivers, making it almost impossible even for those who qualified. In addition, the new rules now exempt estates valued at less than $25,000.

According to the BC/BS Foundation report, MassHealth estate recovery collected $47 million in fiscal year 2019, more than any other state. It is expected to recover approximately half this amount each year once the 2021 changes have been fully implemented. Of the amount recovered, approximately half must be forwarded back to the federal government to reimburse it for its contribution to

The impact of loosening the hardship waiver rules can be seen in the statistics. Prior to the 2021 reform, in an average year, 33 waiver applications were submitted and 14 were granted, with the estate recovery claims waived totaling $1.3 million. In 2022, 323 applications were filed and 157 waivers were granted totaling $14.1 million in relief. In other words, the new rules have permitted a more than tenfold increase in the number of hardship waivers sought and granted. One wonders whether the reason that so many waivers still are not granted is because the application process is so difficult, rather than because those applying don’t qualify. Here’s the application form, which includes a list of the required documentation: In addition, the fact that so many hardship waivers have been granted since the reform highlights how draconian the rules were before.

The Recommendations

The report recommends making the following changes to the MassHealth estate recovery system to further reduce its burden on those least able to pay it:

  • Prohibit estate recovery for nonmandatory services for individuals aged 55 and over. States are only required to recover its costs for long-term care services. One reason Massachusetts recovers all costs after age 55 is that it can be difficult to tease out which were for long-term care services and which were not, but other states are able to make this determination.
  • Establish additional hardship criteria. The 2021 reforms expanded the criteria for which heirs can seek hardship waivers. The report recommends exempting assets that are the sole income-producing assets for families as well as homes of modest value.
  • Waive the first $25,000 of the value of estates. The 2021 reforms exempt estates under $25,000, but provide no protection for those above the threshold. In other words, a $24,000 estate must pay no estate recovery claim while one totaling $26,000 currently receives no relief.
  • Provide more information about the estate recovery program in more languages.
  • Provide more education about estate recovery to people who assist applicants for benefits.
  • Publish an annual report on the impacts of MassHealth’s estate recovery program.

Many of these recommendations, as well as other reforms, are embodied in legislation, S.726/H.1168, An Act Protecting the Homes of Seniors and Disabled People on MassHealth, introduced by Sen. Joanne M. Comerford, Rep. Mindy Domb, Rep. Jack Patrick Lewis, and Rep. Matthew J. Muratore.

These changes are all permitted under federal law. It would be better if estate recovery were eliminated entirely, but that would require a change by Congress.

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