Tell these 10 states: Don't let Medicaid take my house after I die [View all]

[ProSense]

Tell these 10 states: Don't let Medicaid take my house after I die

Federal government doesn't like the idea but can't stop it

Thanks to the new health care law, millions more people now qualify for free health care under an expansion of the Medicaid program. Unfortunately, some of those people may end up having their homes seized by their state goverment after they die. Specifically, that risk applies to new Medicaid recipients 55 and older who live in 10 states: California, Colorado, Iowa, Massachusetts, Nevada, New Jersey, New York, North Dakota, Ohio, and Rhode Island.

Why? It goes back to an obscure federal law that allows states to pay themselves back for Medicaid benefits paid to some people after they die, drawing on the estates of those dead people. The law applies to everyone who gets Medicaid for nursing home care, but states have the option to extend it to all over-55 recipients of Medicaid—including, in the case of those 10 states, those taking advantage of the new expansion of benefits.

As the news of the threat of "estate recovery" has spread, some people are actually turning down Medicaid that they're entitled to. “We’ve heard of people having their children pay full premiums for private insurance because they want to leave their houses to their kids,” Michelle Lilienfeld, senior attorney with the nonprofit National Health Law Program, said...health advocates and state Medicaid agencies have been waiting for the federal government to issue “guidance” on whether it’s kosher for states to go after the estates of over-55 Medicaid expansion recipients. Finally the guidance has appeared—and changes nothing for the time being.

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The one encouraging thing about the government’s guidance: if you’re getting expanded Medicaid, the state government can’t put a lien on your house while you're still alive, as it can for people whose nursing home bills are being paid by Medicaid. That means that once you’re off Medicaid and onto Medicare, and live in a state that’s still determined to take your house, you can get around it by signing it over to your children before you die.

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http://www.consumerreports.org/cro/news/2014/02/can-medicaid-take-my-house-when-i-die/index.htm

Implementing Health Reform: Medicaid Asset Rules And The Affordable Care Act

by Timothy Jost Timothy Jost

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From very early in the Medicaid program’s history, however, there has been a concern that people who could otherwise afford to pay for at least some long-term care services would voluntarily impoverish themselves, transferring assets to their children or to others to make themselves eligible for Medicaid. Congress and the states have therefore adopted laws and regulations to limit asset transfers by Medicaid recipients. These prohibitions were initially evaded through the use of trusts and other financial devices, resulting in the enactment of additional laws to bar these evasions.

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The Affordable Care Act creates a new category of Medicaid recipients — adults with incomes under 133 percent of the poverty level. It also changes income and asset eligibility rules for parents, children, and pregnant women, who were already eligible for Medicaid. Eligibility for these categories of recipients is now calculated based on “modified adjusted gross income,” or MAGI. There are no asset requirements for persons who become eligible for Medicaid under MAGI rules. The question thus arises as to how existing rules regarding asset transfers, liens, estate recoveries, and post-eligibility income apply to persons eligible for Medicaid based on MAGI.... Although the federal and state law governing Medicaid liens and estate recoveries are primarily concerned with recipients who receive high-cost long-term care services, federal law that existed prior to the ACA allows states to recover from the estates of any Medicaid recipient age 55 or over for the cost of any Medicaid services, and a number of states have existing laws that would allow such recoveries. ACA opponents have been spreading the word that if people age 55 or over sign up for expansion Medicaid, the government will recover from their estate when they die. The Memorandum attempts to address these concerns.

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Medicaid rules prohibit Medicaid coverage of LTSS for persons who have equity in a home that exceeds a certain value, which for 2014 is set at $543,000 (or, at a state’s option, at $814,000). Although, again, there are no asset restrictions on MAGI eligibility, the home equity requirement applies to eligibility for LTSS services, not for Medicaid, and thus applies to MAGI-eligible individuals who receive LTSS services.

Individuals who receive institutional and home and community-based LTSS services as traditional categorically- or medically-needy Medicaid recipients must generally spend all of their income on LTSS, except for a small personal needs allowance and funds necessary to maintain their spouse or family in the community, with Medicaid paying for the additional cost of the services. These post-eligibility treatment of income (PETI) rules do not explicitly apply to MAGI-eligible individuals. CMS recognizes, however, that it is inequitable to apply these rules to other Medicaid recipients but not MAGI individuals. It is contemplating rulemaking, therefore, to extend these rules to MAGI eligible individuals...most of the rules that apply to traditional Medicaid recipients with respect to LTSS (except for lien requirements) are likely to apply to MAGI-eligible individuals who receive LTSS. CMS intends, however, to take steps to avoid applying estate-recovery rules to MAGI-eligible individuals who do not receive LTSS to keep this from becoming a barrier to Medicaid expansion eligibility.

http://healthaffairs.org/blog/2014/02/24/implementing-health-reform-medicaid-asset-rules-and-the-affordable-care-act/