Reducing the Burden of Medicaid Estate Recovery: Policy Options for Massachusetts

On February 7th, the Massachusetts Medicaid Policy Institute (MMPI), a program of the Blue Cross Blue Shield of Massachusetts Foundation, released the Aurrera Health Group-authored issue brief Holding on to Home: A Primer on MassHealth Estate Recovery and Options for Reducing Its Impact on Members and Families. Medicaid estate recovery has the potential to perpetuate wealth disparities and inter-generational poverty among Medicaid beneficiaries’ heirs. MMPI contracted with Aurrera Health to identify policy options to reduce the burden of Medicaid estate recovery on communities that are economically, racially, culturally, or socially marginalized. 

Background  

Medicaid is a key source of coverage for long-term services and supports (LTSS) for older adults and individuals with disabilities. Under federal law, states are required to seek reimbursement from certain Medicaid members’ estates after death for LTSS-related services they received. States also have the option to recover the cost of all Medicaid-covered services provided. To resolve the state’s claim against an estate, surviving family members are often forced to sell assets such as the deceased member’s home, which is typically the most valuable asset inherited. For this reason, Medicaid estate recovery has the potential to perpetuate wealth disparities and inter-generational poverty among Medicaid beneficiaries’ heirs. Prior to 2021, Massachusetts recovered more from beneficiary estates than any other state. MassHealth, the Massachusetts Medicaid agency, made changes in 2021 to reduce the scope of their estate recovery program and the number of families who would be subject to estate recovery, thereby reducing the undue burden placed on families and heirs. However, state law still requires the Medicaid agency to exceed federal minimum requirements and recover for the cost of all Medicaid services provided. To produce this report, Aurrera Health assessed Massachusetts’ current Medicaid estate recovery policy and practices, how their policies compare to those of peer states, and how estate recovery affects marginalized communities. Aurrera Health reviewed literature and interviewed MassHealth officials, Massachusetts-based member advocates, and Medicaid officials from peer states who recently reduced the scope of their estate recovery programs.  

Way for Massachusetts to Reduce the Burden of Estate Recovery 

Through this work, Aurrera Health identified policy options to reduce the MassHealth estate recovery program’s negative effects on members and families. These changes may have fiscal and administrative implications for the state but would protect more people, particularly people from marginalized populations, from losing wealth due to estate recovery. These proposed options include: 

Limiting the scope of Medicaid services eligible for recovery.  

• Massachusetts could pursue recovery only for the services required under federal law. For example, it could join the 27 other states that do not pursue recovery for optional services for individuals over 55. 

Expanding exemptions to reduce the members and heirs subject to estate recovery.  

• Massachusetts could create more relief for caregivers by exempting from estate recovery any asset that is the sole income-producing asset of survivors and homes of modest value.  

• Massachusetts could, like Georgia and Illinois, waive the first $25,000 in value of any estate subject to an estate recovery claim to provide all estates with some form of relief. 

Increasing education, outreach, and transparency around the Medicaid estate recovery program. 

• Massachusetts could offer estate recovery program information in a wider range of languages than is currently available to enhance education and accessibility for different populations. 

• The state could educate trusted advisors and assisters who help individuals enroll in Medicaid to answer member questions on estate recovery and hardship waiver options. This could include working with certified Medicaid application counselors, hospital case managers, and nursing home staff.  

• The state, through a legislative mandate, could require MassHealth to publish an annual report on the impacts of estate recovery policies in the state, including data on hardship waivers, to analyze trends and inform future programmatic decisions. 

Aurrera Health Group’s Capabilities 

As demonstrated in this report, Aurrera Health has the tools to evaluate estate recovery policies and provide strategic guidance to policymakers. We are equipped with the expertise and experience to conduct literature reviews, analyze federal and state law and regulations, interview stakeholders, and develop resources that convey the results of our analysis for a wide range of audiences. 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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Kristal Vardaman [Managing Principal]

Liz Stein {Senior Policy Consultant]]

Mallika Mahalingam [Senior Policy Consultant]