Medicaid estate recovery

The view that there were problematic aspects of the interaction of non-long-term-care-related Medicaid estate recovery with the Affordable Care Act (ACA) was put forth in various places starting from the time the ACA was passed,[5][9][1][12][13][14][15] and stemmed from the fact that much of the coverage made available under the ACA is Medicaid, which is subject to estate recovery for people 55 and older, in a number of states.

The ACA was designed to make available, and promoted as making available, affordable health insurance to all people without other forms of insurance.

It attempts to make the insurance available (for the case of U.S. citizens[16][17]) by (1) retaining existing Medicaid programs ("traditional Medicaid", which generally required both low incomes and very low asset levels); by (2) starting a new class of Medicaid, expanded Medicaid, for people whose Modified Adjusted Gross Incomes (MAGIs) are no more than 138% of the Federal Poverty Level (FPL) and with no maximum asset levels;[16] and by (3) offering people with all income levels access to on-exchange insurance plans from private insurers, and offering sliding-scale income-based subsidies for those with MAGIs above 100% of the Federal Poverty level to 400% of the Federal Poverty Level, provided they are not eligible for either a traditional Medicaid or expanded Medicaid or a Children's Health Insurance Program (CHIP), or an employer's or a family member's employer insurance program.[16]

One aspect of the problematic interaction point of view that was raised is seen by noting that the goal of providing health insurance is interfered with if states exercise their option to recover costs of all medical care (not just LTCR) for people 55 or older. People getting Medicaid (including expanded Medicaid) don't then have the protections normally associated with health insurance. Medical expenses are paid for the recipient at the time they are incurred, but must be paid back by the person's estate when they die. The amount to be paid back may not be just an insurance premium equivalent or capitation payment, but may be all medical expenses incurred.[8][7][18] Thus, the view is that the coverage does not offer the protections associated with insurance, and that the coverage is more accurately characterized as, and offers only the protections of, a loan.[12][19][20]

(People 55 or older getting Medicaid are not eligible to receive a subsidy[16] on an ACA on-exchange plan, but do have an option of purchasing an ACA on-exchange plan without a subsidy.[16] However, this option may be unaffordable, since the class of people involved often have a MAGI at or below 138% of the Federal Poverty Level.)[21]

An additional problematic aspect of the estate recovery of non-LTCR expenses that was brought up, was the unequal treatment of people below 138% of the FPL under the ACA, who get expanded Medicaid and are subject to estate recovery if they are 55 or older, and people just above 138% of the FPL, who get highly subsidized, very-low-net-cost, on-exchange insurance, which is not subject to estate recovery.[5][6][1][12][13]

Another aspect raised was that people were obligated under the ACA to be covered under threat of a financial penalty if not covered, but for many people, the only affordable coverage available was Medicaid. The Medicaid came often with capitation charges against the person's estate even if medical services were unused,[5][6] and further, often came with a risk of large payments for medical services used if the person got sick having to be paid back by the estate.[2][7][8] The Federal mandate has been removed effective the start of 2019, this aspect continues to have relevance in states which have their own financial penalties for not carrying coverage[22], which include New Jersey,[23] Massachusetts,[8] [24] and the District of Columbia[18] among states that currently do estate recovery of non-LTCR Medicaid expenses.)

In a Jan, 2014 Washington post article, Matt Salo, executive director of the National Association of Medicaid Directors, responded to the issues by indicating "It wouldn’t make sense for a state to pursue a claim on the property of a new [expanded] Medicaid recipient under the health-care law", and added, “There’s no way any state is going to see it as cost-effective or politically sensible to do that.”[1] (However, subsequently, state Medicaid spokespersons for both NJ and MN made contradictory assertions, indicating their states intended to continue the estate recovery of all medical expenses for all Medicaid recipients.[25][26] As of Aug, 2019, at least 12 states that have expanded Medicaid: Massachusetts[8][24], New Jersey[23], Iowa,[27] Nevada,[28] New Hampshire,[29] [30] North Dakota,[31] Ohio,[32] Rhode Island,[33] Indiana,[34] Utah,[35] Maryland[36], and the District of Columbia[18] maintain the estate recovery of all medical expenses for expanded Medicaid recipients in their laws and regulations.)

In late February 2014 (two months after the main ACA provisions went into effect) the Obama administration's Center for Medicare and Medicaid Services (CMS) issued a letter stating that “CMS intends to thoroughly explore options and to use any available authorities to eliminate recovery of Medicaid benefits consisting of items or services other than long term care and related services in the case of individuals who are determined eligible for Medicaid benefits using the MAGI methodology."[9][37] (Note that "MAGI methodology" for Medicaid eligibility refers to roughly those people added to Medicaid in expanded Medicaid.[9])

Medicaid estate recovery documents from the various states that do estate recovery of non-long-term-care related expenses often explain the purpose of their estate recovery program. For example, a NJ document has "DMAHS pursues recovery from estates to supplement funds available for medical assistance programs and limit the burden upon taxpayers caused by rising medical costs. Funds recovered help provide assistance to others in need."[23]

It can be argued that the justifications were written before the ACA main provisions went into effect in 2014, and do not account for the changes in who is affected by the recovery post-ACA, and as well, that the ACA may reflect a changed attitude intended in the law, that affordable health insurance should be, post-ACA, available to all as an expected matter of national policy. Thus, some may consider it important to examine justifications post-ACA, under the assumption of expanded Medicaid.

Post-ACA, the argument to continue non-long-term-care-related estate recovery was expressed by an assistant commissioner for the Minnesota Department of Human Services (a state which had expanded Medicaid) as “The general idea here is that people with assets should help contribute to the cost of their coverage, Many have incurred thousands of dollars of medical expenses at taxpayer expense. That’s the reason for these recoveries. It’s not intended to be punitive.”[5]

Just prior to the ACA main provisions[38] going into effect on Jan 1, 2014, a number of Medicaid expansion states had had laws and regulations which did the non-long-term-care-related estate recovery, and have stopped or limited the practice, though not necessarily permanently. These are:

New York (starting April 1, 2014) [39][40]

Connecticut (retroactive to ACA main provisions start; expanded Medicaid only; not extending to all non-long-term-care related)[41][42]

Washington (at ACA main provisions start)[43][44]

Oregon (at ACA main provisions start)[45][46]

California (2017)[47][48]

Minnesota (2017)[49][50] Note Minnesota has language on the signature page of its ACA application that may leave open its option to estate recover from current Medicaid recipients if it changes its laws or regulations in the future, and/or to recover from Medicaid recipients in future years on ACA auto-renewals.[7]

Colorado[51][52]

In addition, there are some Medicaid expansion states which did not do non-LTCR Medicaid estate recovery, and still do not (such as Pennsylvania).[53][54]

In other Medicaid expansion states which did non-LTCR Medicaid estate recovery just prior to the ACA main provisions, (such as Massachusetts,[8][24] New Jersey[23], Iowa,[27] Nevada,[28] New Hampshire[29][30], North Dakota[31], Ohio[32], Rhode Island[33], Indiana[34], Idaho[55], Utah[35], and Maryland[36], as well as in the District of Columbia,[18]) the recovery of non-LTCR persists (as of 8/2019).