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Wednesday, March 12, 2014

CMS Issues Letter to State Medicaid Directors on Estate Recovery for Medicaid Enrollees

Dee Mahan

Last month, the Center for Medicare and Medicaid Services (CMS) issued a letter clarifying Medicaid’s estate recovery rules. These federal rules govern state Medicaid agencies recovering costs from the estate of someone who has received Medicaid to pay for health or long-term care. These rules have been in place since 1993 and are not part of the Affordable Care Act.

We wrote about the estate recovery rules in response to several news articles dissuading older adults from signing up for the Medicaid expansion. Specifically, we wrote about the portion of these long-standing rules that addresses Medicaid recovering costs from estates of people who received Medicaid when they were 55 and older. In states that have already or plan to expand Medicaid, more adults over age 55 will be eligible for Medicaid coverage.

Federal law requires states to try to recover the cost of long-term care and related services from the estates of individuals who were 55 or older when they received Medicaid. In its letter, CMS confirmed that this applies to individuals who are receiving Medicaid as a result of a state’s Medicaid expansion. But CMS also confirmed that states can limit this to costs associated with long-term care and related services. Currently, states have the option to try to recover health care costs beyond long-term care, but they are not required to do so. 

Moving forward, CMS said that it will continue to explore ways that it can eliminate estate recovery for Medicaid expansion enrollees 55 and older, except for long-term care costs. 

In the meantime, advocates should work with their states to ensure that policymakers limit estate recovery to long-term care and related costs for people who are eligible for Medicaid based on income alone (which would include the expansion population). For states, the administrative costs of collection can be high, and a broad estate recovery policy could deter some people from signing up for the Medicaid expansion. That could end up costing the state more in uncompensated care costs than it might ever recover from enrollees’ estates. 

Health care consumers who are concerned about Medicaid estate recovery should consult with an attorney to serve as an expert in this field. 

Medicaid estate recovery rules should not deter those who are eligible for Medicaid (especially the new group of people who are eligible under the Medicaid expansion) from signing up for coverage. The costs of being uninsured are real; they can hit you at any time and be devastatingly high. Being uninsured can end up costing you, and your potential heirs, a lot more than the possibility that the state might seek recovery from your estate sometime in the future.