What Is Happening With Medicaid Estate Recovery – And Why It Matters
OPEN MINDS Daily Executive Briefing | Laura Morgan
Recently we reported on California’s move to limit the reach of its Medicaid estate recovery program to cover spending only on long term service and support services (LTSS) (see California Considering Change To Limit Medi-Cal Estate Recovery To Long-Term Care Only). California’s move follows similar changes made by three other states – Oregon, Washington, and Connecticut (see Medicaid Estate Recovery And The Oregon Health Plan, Washington State Health Care Authority (HCA) Says State’s Recovery Policy Will Be Adjusted To Protect New Medicaid Enrollees, and Connecticut Medicaid State Plan Amendment 14-022: Change In Medicaid Estate Recovery). Following those stories, a reader inquired about remaining states – to answer, the team at OPEN MINDS made a review of all state estate recovery programs.
But first, what is Medicaid estate recovery? Federal Medicaid estate recovery policy requires state Medicaid agencies to recover the expense of LTSS benefits – nursing facility services, home and community-based services, and related hospital and prescription drug services – from the estates of deceased Medicaid recipients, ages 55 or older, when they have no surviving spouse, minor child, or adult disabled child, or who, regardless of age, were permanently institutionalized (see Estate Recovery and Liens). When the Centers for Medicare and Medicaid Services (CMS) made estate recovery programs mandatory in 1993, it left it up to the states to decide whether they also recouped other benefits covered by the state Medicaid plan (i.e., non-LTSS benefits), and whether recovery applied only to state-defined probate or included other non-probate assets. It is also up to the state whether estate recovery efforts are continued after the death of a surviving spouse or after a surviving child loses its protected status.
The result is a complicated picture. Not including changes anticipated in California, 15 states (29%) limit their recovery efforts to only LTSS benefits paid out after a Medicaid beneficiary turns 55. The remaining 36 states (71%) seek recovery of both LTSS and non-LTSS benefits paid out after a Medicaid beneficiary turns 55, but target different sets of beneficiaries. Of the 36 states recovering both LTSS and non-LTSS benefits:
- 27 recover LTSS and non-LTSS spending from the estate of any deceased Medicaid beneficiary, aged 55 and over
- Nine recover LTSS and non-LTSS spending from estates of deceased Medicaid beneficiaries aged 55 and over, but only if they actually received LTSS services
As late as FY 2004 (the last year national data was published), estate recovery collections reached over $360 million, but resulted in the recovery of less than one percent of Medicaid spending on institutional services. If you include the approximately $32 billion spent on home and community based services in that year, recovery amounts recouped only 0.4% of total Medicaid long term care spending (see Medicaid Long Term Care Expenditures, FY 2004).
So what do Medicaid estate recovery rules (and changes) mean for provider organizations? Estate recovery results may not be a funding “game changer,” but can hit individuals hard. CMS is not expected to change estate recovery rules affecting LTSS services, but will likely push states recovering non-LTSS services to re-examine their programs because of concerns about equity and the creation of a disincentive for individuals newly eligible for Medicaid to enroll (see CMS To Revise Medicaid Estate Recovery Rules To Limit Scope To Long-Term Care Services & Supports). Currently, 15 of the 26 states plus the District of Columbia, which expanded Medicaid in 2014, target both LTSS and non-LTSS benefits in their estate recovery programs: California, Colorado, District of Columbia, Hawaii, Iowa, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Dakota, Ohio, and Rhode Island.
Provider organizations educating and enrolling clients in Medicaid will want to continue their efforts to inform clients about their state’s Medicaid estate recovery program and its implications for their estate, including their home (the home is considered to be part of a recoverable estate unless there is a surviving spouse, minor child, or adult disabled child). Additionally, provider organizations counseling clients will want to educate themselves on which assets are included in the state Medicaid estate recovery program (probate and any non-probate), and rules affecting when and how assets can be sheltered by the beneficiary without triggering a period of Medicaid ineligibility (see CMS Announces Program To Protect Client Assets From Estate Recovery).
For a more detailed look at Medicaid estate recovery programs, premium members can access our recent Market Intelligence Report: What Does Federal Medicaid Estate Recovery Policy Mean For Consumers?.
