State Options to Reduce the Burden of Medicaid Estate Recovery

Background

Medicaid is the primary source of coverage for long-term services and supports (LTSS) for older adults and individuals with disabilities. Federal law requires state Medicaid programs to seek reimbursement from certain Medicaid members’ estates for the cost of providing LTSS after the member is deceased. States also have the option to recover the cost of all Medicaid-covered services provided. While this practice is meant to help states offset the costs of providing LTSS-related services, the burden of estate recovery falls on surviving family members with modest incomes who are often forced to sell assets, including the deceased member’s home, to resolve the claim. Medicaid estate recovery disproportionately affects people of color, given disparities in homeownership and household wealth. Therefore, Medicaid estate recovery can perpetuate wealth disparities and inter-generational poverty among families of Medicaid members.Recent media reports have highlighted the harmful effects Medicaid estate recovery has on family members of deceased Medicaid recipients, including legal obstacles and additional financial and emotional stress for the families. In addition, Representative Jan Schakowsky (D-IL) recently reintroduced the Stop Unfair Medicaid Recoveries Act, a bill to repeal the federal mandate for Medicaid estate recovery.

State Flexibility and Opportunity for Reform

Outside of federal requirements, states have broad flexibility in how they administer their Medicaid estate recovery programs. States can use this flexibility to reduce the burden of estate recovery on families of the deceased. For example:

• 27 states only recover for federally-mandated services;

• Three states waive the first $25,000 in value of any estate subject to recovery claim to provide all estates with some form of relief;

• 36 states have a waiver exempting an estate from recovery if it serves as the sole-income producing asset of survivors, such as a family farm or other family business; and

• Eight states have a waiver exempting homes under a certain value from estate recovery.

In addition to policy levers, states can implement programmatic changes to increase awareness and better inform Medicaid members and their families of estate recovery policies. While states must provide notice to Medicaid members explaining estate recovery, this information is complex and may not be provided in ways that are accessible to all. States can consider increasing education and outreach around estate recovery, including options for waivers and exemptions, and publishing data on the impacts of the estate recovery program to promote transparency.

Aurrera Health Group’s Capabilities

Aurrera Health consultants recently authored the issue brief Holding on to Home: A Primer on MassHealth Estate Recovery and Options for Reducing Its Impact on Members and Families in partnership with the Massachusetts Medicaid Policy Institute—a program of the Blue Cross Blue Shield of Massachusetts Foundation. The report was also recently featured in The Boston Globe article, Mass. burdens poor by overly aggressive policy to recoup Medicaid costs after death, report says. If you are interested in learning about how Aurrera Health can assist you in informing conversations about estate recovery in your state, or our approach to policy assessment across other related topics, please reach out to Kristal Vardaman.

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Authors

Kristal Vardaman [Managing Principal]

Mallika Mahalingam [Senior Policy Consultant]

Liz Stein [Senior Policy Consultant]