Rep. Jan Schakowsky (D-Ill.) has introduced The Stop Unfair Medicaid Recoveries Act, which would repeal the requirement that states establish a Medicaid estate recovery program and would limit the circumstances in which a state may place a lien on a Medicaid beneficiary’s property.
The newly introduced bill, H.R. 6698, follows an April 2021 Issue Brief, entitled, "Medicaid Estate Claims: Perpetuating Poverty & Inequality for a Minimal Return," in which five elder advocacy groups called on Congress to eliminate Medicaid estate recovery after the Medicaid and CHIP Payment and Access Commission concluded that the practice recoups only a tiny percentage of Medicaid spending while contributing to generational poverty and wealth inequity. The groups issuing the brief included the National Academy of Elder Law Attorneys and Justice in Aging.
Current federal law requires that state Medicaid programs attempt to recover long-term care costs from the estates of deceased recipients. The mandate, courtesy of the 1993 Omnibus Budget Reconciliation Act (OBRA '93), OBRA ‘93 was passed partially in response to estate planners who lawfully helped clients move assets so that they could more quickly become eligible for Medicaid. Rather than change the asset transfer rules under the Medicaid eligibility requirements, the federal government opted to leave the majority of the transfer rules the same and place the burden on the states to recover assets from those who have assets left after death. In other words, recipients could effectuate transfers to shield assets from Medicaid, but those that did or could not, risked asset recovery.
At the time OBRA '93 was enacted, only twenty-two states had chosen to employ some form of estate recovery. OBRA '93 initially divided the nation with some states rebelling against the practice. West Virginia actually sued the Department of Health and Human Services (DHS) arguing the federal mandate was unconstitutional. A federal appellate court found that the mandate did not violate the Constitution. West Virginia responded, trying to soften the blow of estate recovery, by exempting approximately $50,000 in home value so those poor families would not lose their homes. West Virginia was blocked from enacting its preferred policy: even this targeted protection for impoverished families was found to violate the federal mandate.
Texas, Georgia, and Michigan also balked at implementing the law. Michigan was the last hold out, finally conforming in 2007 when the federal government threatened to withhold its Medicaid funds. The result? Medicaid Resource Recovery is the law and is the norm. Worse, the experience has encouraged States to enact even more draconian recovery efforts, such as filial responsibility, lest the federal government tap the State as a scofflaw and threaten defunding.
Due to Medicaid’s strict resource requirements, the only thing of significant value that a Medicaid recipient owns at death is their home, which is an exempt asset for determining Medicaid eligibility. Notwithstanding that a recipient's home is exempt in determining eligibility, serves to reduce the actual cost of caring for the senior by avoiding expensive institutional care, and is, in the vast majority of cases, better for the recipient's health and well being, Medicaid Resource Recovery permits the state to recover the home and the proceeds of sale to reimburse the state for benefits paid. The loss is especially difficult for family members who help a recipient keep and maintain the home, believing that in addition to the better quality of life they are giving the recipient, they might receive reimbursement from the sale of the home. Rep. Schakowsky characterized the resulting trauma:
“Imagine losing a loved one and putting them to rest, only to have Medicaid come knocking on your door demanding you now pay for the long-term care your departed relative received -- an amount that has reached, in some cases, hundreds of thousands of dollars. Sadly, too many families experience this traumatic, horrific and cruel situation all the time. It is a well-kept secret with devastating and shocking consequences to families.”
Praising the new legislation, Eric Carlson, Justice in Aging’s Directing Attorney, said: “
By forcing the sale of family homes, Medicaid estate claims keep families in poverty and increase the risk of homelessness. The Stop Unfair Medicaid Recoveries Act will fix this problem so that low-income persons don’t have to risk the family home in order to receive needed long-term care.”
The bill, which has a dozen co-sponsors, was referred to the House Committee on Energy and Commerce, of which Rep. Schakowsky is a member. She is also Co-Chair of the House Democratic Task Force on Aging and Families.
Among other changes to the Social Security Act, 42 U.S.C. 1396p(a), the bill would add a new paragraph providing that “no adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be initiated, maintained, or collected on or after the date of the enactment of this paragraph. Not later than 90 days after such date, a State shall withdraw any lien in effect as of such date with respect to such medical assistance correctly paid.”
Several other organizations have voiced their support for this legislation:
“California Advocates for Nursing Home Reform is thrilled to support Representative Schakowsky's bill to eliminate Medicaid estate recovery,” says Patricia McGinnis, Executive Director of California Advocates for Nursing Home Reform. “It's about time we stopped punishing seniors and disabled individuals simply because they cannot afford private health care. Indeed, these recovery programs have turned Medicaid into an expensive loan rather than a benefit.”
“Medicaid estate recovery disproportionately affects people with disabilities and their families—particularly those struggling to afford housing, long term services and supports, and other home and community-based services,” says Bethany Lilly, Senior Director of Income Policy, The Arc of the United States. “The Arc is proud to support this legislation because it will help protect and expand the financial security of people with disabilities and their families.”
“Caring Across Generations is proud to support this legislation that will stop the attempts to recover funds for services that everyone should have access to when they need them, long-term services and support,” says Nicole Jorwic, Chief of Advocacy and Campaigns, Caring Across Generations. “Ending this policy that disproportionally impacts communities of color, people with disabilities and low-income families, will break a cycle of poverty and allow dignity for those who require these supports, and allow comfort to those Medicaid recipients at the end of their lives, knowing they can leave what they choose to their loved ones.”
“Medicaid estate claims prevent families from building generational wealth through homeownership, exacerbating existing economic inequities,” says Jennifer Lav, Senior Attorney at the National Health Law Program. “These rules are especially detrimental to families of color that have lower homeownership rates because of discriminatory lending and housing policies, and the families of people with disabilities, who need months or years of long-term services and supports. As long-time advocates, the National Health Law Program strongly supports The Stop Unfair Medicaid Recoveries Act and calls on Congress to pass it as a means of addressing systemic inequities in both health care and housing.”
The Stop Unfair Medicaid Recoveries Act is endorsed by Justice in Aging, California Advocates for Nursing Home Reform, The Western Center on Law and Poverty, The Arc of the United States, Caring Across Generations, The National Domestic Workers Alliance, Families USA, and Easterseals.
The bill’s authors are looking for families who have experienced Medicaid estate recovery to share their stories to educate members of Congress and seek their support for this legislation. If you know of any families who would be willing to share their story, please contact: info@justiceinaging.org.
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