Collecting money from the estates of deceased Medicaid beneficiaries is not a new practice, but it is generating new interest.
For a couple decades, all states have been required by CMS to try to get reimbursement for long-term care expenses of Medicaid beneficiaries who die at age 55 or older. Trying to recoup other Medicaid costs for deceased beneficiaries is optional. California is one of 10 states that actively pursues reimbursement for a variety of Medi-Cal services and benefits after a beneficiary dies. Medi-Cal is California’s Medicaid program.
This week, the California Legislature will deal with a proposal that would require California to back off from its practice of recouping Medi-Cal costs beyond those associated with long-term care.
Consumer advocates say California’s reputation is scaring potential Medi-Cal beneficiaries away from coverage, which undermines the intent of the Affordable Care Act.
“Think of the family that worked their whole life and was able to purchase a small home, but then falls on hard times through job loss,” said Betsy Imholz, special projects director for Consumers Union.
“They are being deterred from getting Medi-Cal for fear of losing the family home once they die,” Imholz said.
Elizabeth Landsberg, director of legislative advocacy for the Western Center on Law & Poverty, said it’s a matter of fairness.
“Now that people are required by law to have health coverage, it is unfair that only poor people have their modest resources subject to estate recovery to pay back for that coverage,” Landsberg said. “States have to seek payment for long-term care services, but not for basic health care services as California does, and it’s that second piece what we’re trying to change.”
Bill Follows Federal Recommendation
The Western Center on Law & Poverty and California Advocates for Nursing Home Reform are co-sponsors of SB 1124, by Senate Health Committee Chair Ed Hernandez (D-West Covina). The bill was introduced in February, the same month CMS issued a letter to all states urging them to eliminate the recovery of Medicaid benefits beyond long-term care costs.
The bill would:
- Limit asset recovery of Medi-Cal beneficiaries ages 55 and older to long-term care in nursing homes;
- Prohibit asset recovery from the estates of surviving spouses of deceased Medi-Cal beneficiaries; and
- Require the state to provide beneficiaries with a list of Medi-Cal expenses subject to estate recovery.
SB 1124, which has cleared two committees, will be heard by the Assembly Committee on Health on Tuesday.
The issue became a focal point partly because of the expansion of Medicaid under the ACA. Enrollment officials in several states — including California — reported reticence from some potential Medicaid beneficiaries who said they were hesitant to sign up for coverage because they had heard the state could seize their estate after death.
“We definitely heard from potential enrollees who didn’t sign up for coverage because of fear that the family home might be taken after a death,” said Anthony Wright, executive director of Health Access California.
“That’s not the way it should work,” Wright said. “I understand the estate recovery piece of long-term care, but the idea you would have recovery for managed care capitated payments — that’s just not right. It turns what should be a boost for the underprivileged in our society into basically a loan. And that’s not the intent of the Affordable Care Act,” Wright said.
Wright said the bill’s passage would have a “relatively small impact in terms of the number of people or amount of money” it influenced, but it would be go a long way toward clearing the air for subsidized coverage which is expanding its societal role under the ACA.
“This would allow us to have a clear, unambiguous response to people who are worried,” Wright said. “I don’t think there are that many people who would actually have their assets seized after death because most people in Medi-Cal don’t have many assets. But the point of Medi-Cal is now no longer the same as it used to be. Requiring people to have coverage changes the dynamics.”
In a letter to legislators supporting the bill, Consumers Union’s Imholz said California’s policy “undermines the goal of providing coverage to as many Californians as possible. It creates a chilling effect on enrollment for lower-income Californians who are forced to choose between getting needed medical coverage and care on the one hand, and saving a family home for their spouse or children on the other. These low-income Californians eligible for Medi-Cal are ineligible for any other subsidized coverage.”
State Must Reimburse Federal Government
While state finance officials estimate the bill’s passage would mean California could lose about $15 million a year in revenue from asset seizure, consumer advocates point out that collecting the money — especially from those who qualify under Medicaid expansion — may be unwise.
“The current policy makes little sense since California must cover 50% of the collection expenses, then send back everything collected to [CMS] for the first three years and then 90% after that time,” Imholz told legislators in her letter.
Over the past decade, California has collected about $60 million a year from the estates of deceased Medi-Cal beneficiaries for long-term care and other services. About half of that has gone to CMS. For those who qualified for Medi-Cal before the ACA, the equation remains a 50-50 split between federal and state. For people who qualify under the ACA’s Medicaid expansion, federal money pays all expenses for the first three years and then 90% after that. All expenses recouped from that portion of the Medi-Cal population would need to be returned to the federal government.