Medicaid Estate Recovery is when the state is able to reclaim money from the estate of a person who was on Medicaid once they have died, for services they used while they were alive; this can mean homes, mobile homes, cash in savings accounts, jewelry or even life insurance. Right now there are millions of American struggling financially, with unemployment rates so high and the looming second wave of the pandemic, many people who are without income and concerned about their healthcare are enrolling into the low income health insurance across the country, known as Medicaid. Many of these people happen to be older Americans, especially because this is the group his hardest by layoffs and the pandemic. One of the biggest concerns that we hear, on a day to day basis in our offices, from older Americans, is their worry about the state taking their house, their car or their assets after they die if they enroll in to Medicaid, under something called “Estate Recovery”.  Today, we are covering the Medicaid Estate recovery and how it may affect seniors’ estates and their families after they die.

What is estate recovery?  

What is estate recovery?  Estate recovery is a means for Medicaid, the federal low-income health insurance program, to seek recovery of payments from the individual’s estates after they have died. Although it varies from state to state, in some states Medicaid has the option to recover payments for all Medicaid services provided to individuals. In some situations, money left in trust after a person dies, may be used to reimburse Medicaid for the services they received. States may impose liens on real property during somebody’s lifetime if they are permanently institutionalized. There are limits to how much Medicaid can reclaim, so they will never collect more than the value of the assets owned by the Medicaid member at the time of their death, and will not collect more than Medicaid paid on behalf of the member. Additionally, Medicaid cannot try to seek reimbursement from the children or other family members of the deceased Medicaid member. Things that count as estate can be houses, mobile homes, cash assets, cars, jewelry etc. The estate recover only applies to Medicaid recipients who are 55 years or older. If a Seniors is considering enrolling into Medicaid, to help them pay for their medical costs, estate recover is an important consideration. Especially, because the cost of medical services can be awfully expensive for end of life care like nursing facilities and home-based community services, let alone prescriptions and hospital care. The state sees recover of these assets as important, because in state like California, Medi-Cal the Medicaid program in California uses the money from the estate recover program to help fund care for other Medi-Cal recipients. 

What is Medicaid

 Estate recovery only applies to Medicaid recipients who are over the age of 55 years old. Medicaid provides healthcare for individuals with income below 138% of the federal poverty level. For a household of two people, this would be income below $23,791 a year. This amount can change for children who are under the age of 19, or for adults over the age of 65. Medicaid is comprehensive healthcare, and provides coverage for things like hospitalizations, doctors visits, medications, lab work and a whole lot more. Additionally, Medicaid can work with Medicare, for seniors over the age of 65 to help pay some of the cost not covered by Medicare. For people over the age of 65, in addition to income limits there are also asset limits (generally around $2000) that a person must be below before they can be eligible for Medicaid. These numbers are in general, and can change from state to state

When can estate recovery does not happen

There is a lot complication with estate recovery, if you are concerned about your estate being affected if you apply for Medicaid, it is important to contact your local Medicaid office or non-profit healthcare advocacy agency, they can guide you through the specifics of estate recovery in your state and for your personal situation. In general, there are limitations on how estate recovery can work. For example, according to Medicaid.gov, they will not seek estate recovery if the deceased has a surviving spouse, children under the age of 21 or a blind or disabled child of any age.  Additionally states will not put liens on real property during the lifetime of the Medicaid enrollee who is permanently institutionalized when the spouse resides in the home, when there is a children under the age 21, a blind or disabled child of any age, or sibling who has an equity interest in the home. 

Medi-Cal in California

States have some flexibility with regards to when they should recover Medicaid monies from an estate. In California the Medicaid program or Medi-Cal, as it is called in California, has extra restrictions put on it, as to when, they would be able to recover money from deceased Medi-Cal recipients and this happen in January of 2017. 

Prior to January 2017: Medi-Cal was able to go after all assets own by the deceased member at the time of their death. Payments would be owed for payments made for most services paid by Medi-Cal on behalf of the recipients. This caused a lot of financial pain to families, often at one of the most difficult times in their lives. This rule still applies to any Medi-Cal recipient who died before January 2017.

After January 2017, Medi-Cal became restricted by the types of payments they could seek reimbursement from deceased members. The repayment would be restricted only to payments made for nursing facility services, home and community-based service and related hospital and prescription drug services receive while the member was inpatient in a nursing facility or certified home and community-based services. 

Conclusion 

Overall Medicaid Estate recover can be a scary thing for seniors who need help with their healthcare but have worked hard all their lives to have something to pass down to their families after they die. Luckily, the majority Medicaid recipients or their heirs will owe nothing after they die. But for those seniors who do have concerns about their estates being recovered by Medicaid after they pass away; it is important they contact the local state Medicaid organization or nonprofit seniors rights organization that will assist them to fully understand how the Medicaid estate recovery works with regards to their specific situation.

Thank you so much for watching, if you have questions about your Medicare or Medicare health plan options please feel free to contact us and we can make a new post or video to cover your questions. We here at California know health insurance weather it is private health insurance, Medicare, Medicaid / Medi-Cal, Medigap or health insurance for your small business. It can be very confusing coming from your work insurance and trying to look at options on the private market or turning 65 and trying to figure out which Medicare option is best for you. That is exactly what we can do, we can walk you through your options and help you find the plans that fits your needs and your budget.