The naked truth from Naked Capitalism:
You won’t find the following info in the ACA. It’s in the Omnibus Reconciliation Act of 1993 (OBRA 1993) – a federal statute which applies to Medicaid, and, if you are enrolled in Medicaid, it will apply to you depending on your age.
OBRA 1993 requires all states that receive Medicaid funding to seek recovery from the estates of deceased individuals who used Medicaid benefits at age 55 or older. It allows recovery for any items or services under the state Medicaid plan going beyond nursing homes and other long-term care institutions. In fact, The Centers for Medicare & Medicaid Services (CMS) site says that states have the option of recovering payments for all Medicaid services provided. The Department of Health and Human Services (HHS) site says at state option, recovery can be pursued for any items covered by the Medicaid state plan. …
Your estate is what you own when you die – your home and what’s in it, other real estate you may own, your bank account, annuities and so on. And even if you have a will, your heirs are chopped liver. Low-income people often have only one major asset – the home in which they live and, in some cases, this has been the family home through several generations.
So what this boils down to is: If you are put into Medicaid – congratulations – you just got a mandated collateral loan if you use Medicaid benefits at age 55 or older! States keep a running tally.
If you want to know the details of Estate Recovery, Elder Law Answers has this timely information:
Medicaid’s Power to Recoup Benefits Paid: Estate Recovery and Liens
Under Medicaid law, following the death of the Medicaid recipient a state must attempt to recover from his or her estate whatever benefits it paid for the recipient’s care. However, no recovery can take place until the death of the recipient’s spouse, or as long as there is a child of the deceased who is under age 21 or who is blind or disabled.
While states must attempt to recover funds from the Medicaid recipient’s probate estate, meaning property that is held in the beneficiary’s name only, they have the option of seeking recovery against property in which the recipient had an interest but which passes outside of probate. This includes jointly held assets, assets in a living trust, or life estates. Given the rules for Medicaid eligibility, the only probate property of substantial value that a Medicaid recipient is likely to own at death is his or her home. However, states that have not opted to broaden their estate recovery to include non-probate assets may not make a claim against the Medicaid recipient’s home if it is not in his or her probate estate.
In addition to the right to recover from the estate of the Medicaid beneficiary, state Medicaid agencies must place a lien on real estate owned by a Medicaid beneficiary during his or her life unless certain dependent relatives are living in the property. If the property is sold while the Medicaid beneficiary is living, not only will the beneficiary cease to be eligible for Medicaid due to the cash from the sale, but the beneficiary would have to satisfy the lien by paying back the state for its coverage of care to date. The exceptions to this rule are cases where a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there.
Whether or not a lien is placed on the house, the lien’s purpose should only be for recovery of Medicaid expenses if the house is sold during the beneficiary’s life. The lien should be removed upon the beneficiary’s death. However, check with an elder law attorney in your state to see how your local agency applies this federal rule.
One of the promises of Obamacare was that you would never go bankrupt from health costs, but your heirs can still lose everything, leaving them without family assets, nor a decent form of healthcare for all Americans…
Residents of Arizona should understand the jeopardy that Estate Recovery causes:
After a member of ALTCS passes, AHCCCS is required to recover funds that it expends to care for an ALTCS member via a process known as “estate recovery.” However, both federal statutes and state regulations prohibit estate recovery, including the placement of a Tax Equity and Fiscal Responsibility Act (“TEFRA”) lien upon an ALTCS member’s residence, when the ALTCS member is survived by either: a spouse, a child under 21, or a child of any age who meets SSA or SSI disability and is blind or disabled.
Notwithstanding the foregoing, there may be potential for AHCCCS to pursue in estate recovery upon the death of a community spouse, however, the legislative history of the federal law that mandated estate recovery, the Omnibus Budget Reconciliation Act of 1993, can be interpreted as prohibiting recovery from the estate of a surviving spouse. Further, it appears that AHCCCS interprets the legislative history as requiring AHCCCS to waive recovery from the estate of a surviving spouse.
How does AHCCCS determine the amount of the estate claim that will be filed against the ALTCS member’s estate?
The amount of the estate claim that will be filed against the ALTCS member’s estate is the total of the ALTCS payments paid on behalf of the member for Medicaid covered services. AHCCCS will also recover ALTCS payments made for a member for Medicare cost sharing payments for services provided on, or before, December 31, 2009. The Medicare Improvements for Patients and Providers Act of 2008 exempts Medicare cost sharing payments from Medicaid estate recovery if they are for services provided on, or after, January 1, 2010.