Medicaid Estate Claims: Not the Debt but the Surprise that’s the Problem
This piece originally appeared in the Pioneer Press on February 21, 2016.
The Duluth News Tribune published an in-depth article on how some people who enrolled in Medicaid through MNsure are making a shocking discovery: The state has placed a claim on their estate for the cost of their Medicaid benefits.
One couple racked up more than $30,000 in estate claims before discovering it. They immediately canceled their Medicaid benefits, as did the other two households reported on in the story, also published in the Pioneer Press.
Estate claims to recover the cost of Medicaid — also called medical assistance — are not at all new in Minnesota. They’ve been part of the program ever since it began in 1967. State law points out quite clearly that “it is the policy of this state that individuals … use their own assets to pay their share of the total cost of care” in the Medicaid program.
Prior to 1993, Minnesota had been voluntarily recovering money from estates on people older than 65 who received Medicaid services. The federal government made estate recovery mandatory in 1993 on people older than 55 who received long-term care Medicaid services and continued giving states the option to recover the costs of all Medicaid services. Like many states, Minnesota opted to recover the cost of all services.
With this history in mind, officials with the Minnesota Department of Human Services (DHS) claim there’s nothing new here.
But Obamacare did include brand-new provisions that paved the way for people with substantial assets to qualify for Medicaid. Before Obamacare, Minnesota offered three public health care programs to adults with asset limits ranging from $1,000 to $20,000. Obamacare eliminated these asset limits and based eligibility solely on a household’s modified adjusted gross income.
Without an asset limit, millionaires are now qualifying for Medicaid.
In addition to doing away with the asset test, Obamacare also mandates insurance coverage, expands Medicaid to people with higher income levels, and creates insurance exchanges to enroll people in Medicaid.
These new policies all work together to encourage people with substantial assets to sign up for Medicaid and unwittingly impose a claim on their estate. Well-meaning Minnesotans go to MNsure to “shop” for coverage to comply with the government insurance mandate and when their income falls within the Medicaid expansion range they find the only option available in the MNsure market is Medicaid. So they sign up for the only option.
In a MNsure market that blurs the distinction between Medicaid and private coverage options, people understandably expect Medicaid to function like private coverage and not impose additional financial obligations. Yet once enrolled in Medicaid, the state slaps a claim on your estate if you’re older than 55.
DHS says people enrolling need to check a box indicating they understand the terms of estate recovery, but none of the people the Duluth News interviewed recall ever being presented with this information when they enrolled.
The fact is, virtually no one ever reads disclosure statements. Incredibly, the navigators paid and trained to enroll people in health coverage through MNsure are not trained to explain estate recovery or alert people to it. DHS plainly says that’s not a navigator’s job.
Moreover, the estate claims far exceeded the medical care received by those in the news report. The state argues the claims cover the per-person managed care payment they pay to insurers to administer the plan. But Medicaid is not insurance and it’s highly questionable to impose an estate claim for medical services never received.
If a private business similarly put liens on property with minimal disclosure for services never rendered, Minnesota’s attorney general would shut them down and they might even find themselves in jail.
At a minimum, the state must alert people in flashing neon lights if they plan to continue this practice.
But the best fix is to reinstate asset tests for any adult receiving Medicaid or MinnesotaCare. It’s wasteful and patently unfair to subsidize health care for people who own substantial assets.
The state may have the flexibility to reinstate an asset test for MinnesotaCare, but, unfortunately, Obamacare does not give states any flexibility to reinstate an asset test for Medicaid.
Without flexibility to reinstate an asset test, using estate claims to recover the cost of all Medicaid services remains a fair policy. People with substantial assets should not be getting virtually free health care. MNsure just needs to give folks fair notice that no one can ignore.