The letter came from the state Department of Human Services in July 2021. It expressed condolences for the loss of the recipient’s mother, who had died a few weeks earlier at age 88.
He then explained that the decedent had incurred more than $77,000 in Medicaid debt and provided instructions on how to repay the money. “I was stunned,” said the woman’s 62-year-old daughter.
At first, he thought the letter might be some kind of scam. It was not.
She asked not to be named because the case is unsolved and she doesn’t want to jeopardize her chances of getting the bill reduced. The New York Times reviewed the documentation supporting her account.
The daughter moved into the family’s Midwestern home years earlier when her widowed mother, who had vascular dementia, began to need help.
Her mother was well insured, with Medicare, a private supplemental “Medigap” policy, and long-term care insurance. The only reason she signed up for Medicaid was because she was enrolled in a state program that allowed her daughter to receive modest payments for care.
But that triggered additional monthly charges through a Medicaid managed care agency, and now the state wants that money back.
The practice dates back to 1993, when Congress mandated that when Medicaid beneficiaries over age 55 have used long-term services, such as nursing homes or home care, states must try to recover those costs from the beneficiaries’ assets. beneficiaries after their death.
“Medicaid requires beneficiaries to spend almost all of their assets” to qualify for benefits, explained Eric Carlson, an attorney at Justice in Aging.
Most states allow those eligible for Medicaid to keep only $2,000 worth of assets. But if a beneficiary has a residence, they can be exempted.
However, if Medicaid has paid for long-term care and there is money after death, government agencies will come after the assets.
“If there’s going to be tens of thousands of dollars available for recovery, in most cases, it’s the house,” Mr. Carlson said. Surviving family members may have to sell the house to repay Medicaid, as Midwestern’s daughter may be forced to do, or the state may seize the property.
Medicaid “is the only public benefit program in the United States of America that requires states to seek to get money back,” said Representative Jan Schakowsky, D-Illinois. This month he reintroduced a bill, the Stop Unfair Medicaid Recoveries Act, to end the practice.
Her staff has estimated that 17,000 families in Illinois alone have lost their homes to Medicaid recovery as of 2021. There are no comparable national figures, but an independent agency that advises the federal government and states on Medicaid issues reported in 2021 that the states raised $733 million through property recovery in fiscal year 2019.
That accounts for only about half of one percent of Medicaid long-term care spending, according to the agency, MACPAC, the Medicaid Payment and Access Commission and CHIP. Only eight states raised more than 1 percent of the spending.
“This is a really harmful and cruel program,” Ms. Schakowsky said. “And it doesn’t work. The cost of actually trying to get the money could exceed the money that would be returned.”
When Congress established the mandate, advocates argued that asset recovery would save money and promote justice, as some higher-income seniors hired lawyers to help protect their assets so Medicaid would pay their nursing home bills .
But for the most part, states pursue claims against low-income families, many of them black and Hispanic. Critics argue that the policy perpetuates poverty. The median wealth of deceased Medicaid recipients over age 65 is less than $45,000, the MACPAC report noted, and the median home equity is $27,364.
“For many of these people, the house is the product of a lifetime worth of work and toil,” Mr. Carlson said. “It could be a foundation for their children and grandchildren. This has been taken away from the family based on these claims. It imposes recovery on families and communities least able to pay it.”
(A surviving spouse or minor or disabled child can continue to live in the home after a Medicaid beneficiary dies, but after the survivors die or after a child turns 21, probate can proceed.)
Every state offers hardship waivers that reduce claims, but “the process tends to be difficult or futile,” Mr. Carlson said. “Depending on the state, the request is almost always unsuccessful.”
“I don’t think asset recovery was a policy created primarily to impact low-income families, but that’s the impact it’s having,” said Natalie Kean, another managing attorney at Justice in Aging.
However, asset recovery can also affect middle-class families. Many turn to Medicaid because, given the cost of nursing homes (the average price last year was $8,669 a month), “your savings can disappear in a hurry,” Mr. Carlson said.
Brian Snell, an elder law attorney in Marblehead, Mass., represents a family whose 93-year-old mother, who suffered from dementia, died in 2022 in her North Andover apartment. Her daughter had cut back her hours as a beautician to care for her at home, wanting to keep her out of a nursing home because “that was her mother’s wish”, Mr Snell said.
When the mother qualified for MassHealth, the state Medicaid program, it enrolled her in a state home care program that provided home health aides (albeit only sporadically, because the pandemic made workers and agencies reluctant to enter homes ).
After her death, MassHealth sought to recover $292,000 in home care costs and plan premiums. Because two of her children were low-income, including the daughter who cared for her, a state waiver would have allowed those two to receive $50,000 each from the sale of the mother’s apartment. But more than half of the $335,000 sale price will go to state and federal governments.
The prospect of such clawbacks prevents some low-income seniors from getting needed care, even if they are eligible.
“It’s not unusual for people to simply refuse to apply for Medicaid services once they learn about the rehabilitation program,” Matthew Portwood, intake supervisor at the Atlanta Regional Commission on Aging, which serves as the local agency on aging, said in an email. . “Our consultants deal with it almost every day.”
Some states are working to lessen the financial hit to low-income families. Massachusetts, Georgia, South Carolina and Illinois, for example, will not seek recovery against estates valued at less than $25,000. Some states now provide applicants with fuller explanations of the consequences of registration.
California allows hardship waivers for a “modest value residential home,” defined as a market value of up to half of the county’s median home price. MACPAC recommended amending federal law to allow states to make recovery optional.
Representative Schakowsky’s bill goes further than that to completely ban Medicaid asset recovery. “It’s just a terrible idea,” he said.
Her bill faces an uphill battle in the Republican-controlled House — all 13 of its co-sponsors so far are Democrats — and went nowhere when she introduced it last session. But the congresswoman remains optimistic: People in red states also need long-term care.
Back in the Midwest, the daughter who was charged $77,000 still hopes to stay in the two-story house where she grew up, where her mother lived for more than 60 years and where “there’s a memory in every corner.” He is now looking for a lawyer. “I have to fight it,” he said.
