When Medicaid comes after the family home

The letter came in July 2021 from the state Department of Human Services. It expressed condolences for the loss of the recipient’s mother, who had died a few weeks earlier at the age of 88.

It then explained that the deceased had incurred a Medicaid debt of more than $77,000 and provided instructions on how to repay the money. “I was stunned,” said the woman’s 62-year-old daughter.

At first she thought the letter might be a scam. It wasn’t.

She asked not to be identified because the case is unresolved and she doesn’t want to jeopardize her chances of getting the bill reduced. The New York Times has reviewed documentation supporting her story.

The daughter moved to 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 enrolled in Medicaid was because she enrolled in a state program that allowed her daughter to receive modest payments for care.

But that led to additional monthly costs through a Medicaid managed care organization, 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 health care, states must try to recover these costs from the estates of the beneficiaries after their death.

“Medicaid requires beneficiaries to spend nearly all of their assets” to qualify for benefits, explains Eric Carlson, an attorney with Justice in Aging.

Most states allow those who qualify for Medicaid to keep assets worth only $2,000. But if a beneficiary owns a home, it may be exempt.

But if Medicaid has paid for long-term care and there is money to be made after death, government agencies will come and collect the assets.

“If there are tens of thousands of dollars available for repairs, in most cases it’s the house,” Mr. Carlson said. Surviving family members may have to sell the house to repay Medicaid, as the Midwestern daughter may be forced to do, or the state could foreclose on the property.

Medicaid “is the only public benefit program in the United States of America that requires states to attempt to recover funds,” said Rep. Jan Schakowsky, Democrat of Illinois. This month she introduced another bill, the Stop the unfair Medicaid Recoveries Actto end the practice.

Her staff has calculated that in Illinois alone, 17,000 families have lost their homes since 2021 due to Medicaid restoration. Comparable national figures are not available, however an independent agency which advises the federal government and states on Medicaid issues reported in 2021 that states raised $733 million through estate recovery in fiscal year 2019.

That amounts to only about half a percent of Medicaid long-term care spending, according to the agency, MACPAC, the Medicaid and CHIP Payment and Access Commission. Only eight states collected more than 1 percent of the spending.

“This is a truly harmful and cruel program,” Ms. Schakowsky said. “And it doesn’t work. The cost of actually trying to get the money could be more than the money that would be returned.

When Congress enacted the mandate, advocates argued that estate recovery would save money and promote fairness, as some higher-income seniors hired lawyers to protect their assets so that Medicaid would pay their nursing home bills.

But for the most part, states are pursuing claims against low-income families, many of whom are black and Hispanic. Critics argue that the policy perpetuates poverty. The average net worth of deceased Medicaid recipients over age 65 is less than $45,000, the MACPAC report said, and the average home equity is $27,364.

“For many of these people, the home is the product of a lifetime of work and budget cuts,” Mr. Carlson said. “It could be a foundation for their children and grandchildren. This is taken away from the family by these claims. It imposes reparations on the families and communities least able to afford it.”

(A surviving spouse or a minor or disabled child can continue to live in the home after a Medicaid beneficiary dies, but after survivors die, or after a child turns 21, estate recovery can continue.)

Every state offers hardship waivers that reduce the number of claims, but “the process is often difficult or futile,” Mr. Carlson said. “Depending on the state, the request is almost always unsuccessful.”

“I don’t think estate recovery was a policy created primarily to impact low-income families, but that is the impact it has,” said Natalie Kean, another managing attorney at Justice in Aging.

However, the recovery of estates can also affect middle-class families. Many turn to Medicaid because, given the costs of nursing homes (the the average price last year was $8,669 per month), “your savings can disappear quickly,” Mr. Carlson said.

Brian Snell, a senior attorney in Marblehead, Massachusetts, 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’s Medicaid program, she was enrolled in a state home health program that provided home care assistance (though only sporadically, as the pandemic made workers and agencies hesitant to enter homes).

After her death, MassHealth sought to recover $292,000 for home care costs and program premiums. Because two of her children were low-income, including the caring daughter, a state waiver would ensure those two would each receive $50,000 from the sale of the mother’s apartment. But more than half of the $335,000 sales price goes to state and federal governments.

The prospect of such clawbacks prevents some low-income older adults from receiving necessary care, even if they qualify.

“It is not uncommon for people to simply decline to apply for Medicaid services once they learn of the recovery program,” said Matthew Portwood, an intake supervisor with the Atlanta Regional Commission, which serves as the local agency on the matter of growing older, in an email. “Our supervisors are confronted with this almost every day.”

Some states are trying to reduce the financial impact on low-income families. For example, Massachusetts, Georgia, South Carolina and Illinois will not pursue recovery of estates valued at less than $25,000. Some states now offer applicants a more detailed explanation of the consequences of filing.

California allows hardship relief for a ‘home of modest value’, defined as a market value of up to half the average price of houses in the province. MACPAC recommended amending federal law to allow states to make recovery optional.

Rep. Schakowsky’s bill goes further and completely bans Medicaid recovery of estates. “It’s just a terrible idea,” she said.

Her bill faces an uphill battle in the Republican-controlled House of Representatives — so far all 13 co-sponsors are Democrats — and it went nowhere when she introduced it last term. But the congressman remains optimistic: People in red states also need long-term care.

Back in the Midwest, the daughter, who was billed $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.” Now she is looking for a lawyer. “I have to fight this,” she said.