5. MEDICAID EXPANSION AND ESTATE RECOVERY
In order to expand Medicaid, several Medicaid regulations were changed:
a) the income limit for eligibility was increased to 133 percent FPL, but since states must apply a 5 percent disregard, this effectively raises the eligibility to 138 percent FPL
b) Modified Adjusted Gross Income will be used in most cases to determine eligibility (also applies to certain CHIP applicants)
c) the age limit was increased to 64, childless adults will be eligible; and
d) the asset test was dropped except for certain groups such as the elderly and people on Social Security Disability – BINGO!
The fact that the asset test was dropped is very important, but before we look at why, you must first understand that if an Exchange determines you are eligible for Medicaid, you have no other choice. Code for Exchanges specifies, “an applicant is not eligible for advance payment of the premium tax credit (a subsidized plan) or cost-sharing reductions to the extent that he or she is eligible for other minimum essential coverage, including coverage under Medicaid and CHIP.” Therefore, you will be tossed into Medicaid unless there are specific rules as to why you would not be eligible. If you are enrolled in a private plan through an Exchange and have been receiving a tax credit, and your income decreases making you eligible for Medicaid, in you go. If you are allowed to opt out because you don’t want Medicaid, you will have to pay a penalty for being uninsured unless you can afford to purchase insurance in the open market.
Just so you’re clear on this: the ACA stipulates that the system will ensure that if any individual applying to an Exchange is found to be eligible for Medicaid or a state children’s health insurance program (CHIP), the individual will be enrolled in such a plan.
Furthermore, to increase enrollment in health coverage without requiring people to complete an application on their own, states are advised to automate enrollment whenever possible by using existing databases for social services programs such as SNAP (food stamps) to enroll people who appear eligible for Medicaid but are not currently enrolled. Therefore, you could find yourself auto-enrolled in Medicaid against your will if your state acts on this advice.
Many times over Mr. Obama et al told you that all Americans would have choice. Choice was another big talking point. Are poor and low-income Americans undeserving of choice? Is the ACA a class-based system? Maybe they meant that for this segment of the population, the choice would be between Medicaid or a penalty for remaining uninsured. This is blatant discrimination.
Here’s why dropping the asset test got the BINGO – Estate Recovery! 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.
a) 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.
b) The HHS site has an overview of the Medicaid estate recovery mandate which also says that at a minimum, states must pursue recoveries from the “probate estate,” which includes property that passes to the heirs under state probate law, but states can expand the definition of estate to allow recovery from property that bypasses probate. This means states can use procedures for direct recovery from bank accounts and other funds.
c) Some states use recovery for RX and hospital only as required by OBRA 1993; some recover for a few additional benefits and some recover for all benefits under the state plan. Recovery provides revenue for cash-strapped states and it’s a big business.
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.
Estate recovery can be exempted or deferred in certain situations after your death, but the regulations for this are limited and complicated with multitudes of conditions. You may not have an attorney on speed dial, but with regard to this hundred pound gorilla, it sure would be handy.
Should you decide to ask your congresscritter about estate recovery, be prepared for responses such as:
— “Estate recovery doesn’t apply to you.” (Great news. Please overnight a copy of the amendment to OBRA 1993 that stipulates estate recovery is no longer required and no longer allowed. Here’s my address.)
— “Oh, estate recovery is state, I’m federal.” (Wrong – estate recovery is federally mandated although the estate recovery program itself is administered by each state.)
— “I don’t know anything about this.” (Highly unlikely because the expansion of Medicaid is an integral part of the ACA and estate recovery is not a secret.)
— “The ACA wasn’t about revamping Medicaid.” (As explained above, Medicaid regs were revised in order to expand Medicaid.)
— “I’ll look into that and get back to you.” (Don’t hold your breath – they don’t want to go there.)
If you ask about estate recovery when you contact an Exchange or speak with an outreach agency, you’ll probably run into a brick wall or be told it doesn’t apply to you – whatever. But, it doesn’t matter because what you are told is not legally binding. What is legally binding is your signature on the Medicaid application which indicates that you agree to the terms of the contract – which brings us to another item in OBRA 1993. Read on.
OBRA 1993 also contains procedural rules intended to ensure that individuals are informed about Medicaid program requirements including disclosure of estate recovery before they complete the application process and also during the annual re-determination process. Notification of estate recovery should be on the signature page of your state’s Medicaid application and is usually a one-liner: I understand that if I am aged 55 or older, (name of your state’s Medicaid plan) may be able to get back money from my estate after I die. (Use of the word ‘may’ doesn’t mean if the state feels like it – it means recovery will take place unless there are specific circumstances for exemption or deferment as mentioned above.) There are also strict recovery/repayment clauses for injury-related settlements disclosed on the signature page and a few other ditties that apply to you or a family member who is enrolled in Medicaid. All of these items must also be disclosed in your state’s Medicaid handbook.
