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Medicaid Estate Recovery: Is it Fair?By Eleanor Canter In 1993 the United States Congress adopted the Omnibus Budget Reconciliation Act , or OBRA. The idea behind the measure, which passed by one vote in the Senate after a tie-breaking vote by Vice President Al Gore, was to boost the U.S. economy by requiring a balanced budget. To that end, Congress took on entitlement programs, which many lawmakers believed were widely abused by citizens. OBRA repealed the cap on taxes for Medicare and increased the taxable portion of Social Security benefits, but it also required states to engage in what is called the Medicaid Estate Recovery Program. States are now required to seize the property of deceased long-term-care recipients, as long as the value of the home exceeds the administrative costs involved in confiscating it. Many states were reluctant to implement this charge, pointing out that Medicaid beneficiaries are by definition impoverished, and questioning the benefit of acquisition of such small estates considering their value to poor (and recently bereft) families. Many Americans today arefacing the sometimes-tragic consequences of this law, which targets seniors and people with disabilities. Many in the latter groups say the law was enacted without their input or consent. This debate was led by the state of West Virginia, whose attorney general took the case to the Supreme Court. West Virginia claimed that the federal government’s requirement that it engage in estate recovery against its citizens, under penalty of losing all Medicaid funding, was coercive and bad policy. In court, West Virginia described the program as a “betrayal of the New Deal, in that the federal government promised it would take care of its citizens, yet never suggested that the elderly and destitute would later be required to forfeit the homes for which they had worked so diligently.” West Virginia lost its case because the federal government had, technically, only threatened to withdraw all or part of its funding. In addition, the state’s argument was deemed hypothetical by the Court because it had decided to comply with the law in the meantime so as not to incur penalties that could have devastated its health-care system. Citizens can find an instructional article on legal ways to avoid estate recovery in West Virginia at www.wvago.us. One of the problems in evaluating this law, as well as distributing information to consumers, is that implementation varies widely from state to state. The OBRA says that states must recover funds from Medicaid recipients over the age of 55 or people with disabilities who cannot reasonably be expected to leave a long-term-care nursing facility. But the law leaves open the definition of estate, when and how to enforce liens against a property, and even notice and appeals procedures. Moreover, the decision of when a person cannot reasonably be expected to leave a nursing facility is made by doctors and professionals employed by the nursing facility, a thought many in the disabled and senior communities find intimidating. Many consumers are still operating under the impression that only property solely owned by the deceased is eligible for estate recovery. Before OBRA was passed that was true, so a father, for example, could leave property to his son upon his death through a traditional will or a legal trust. Under OBRA, however, states now have the option to pursue any property in which the deceased had any title or interest at the time of death. This means that if another individual jointly owns property with the deceased, the state can pursue the entire value of the property. That property is most likely the only possession of most Medicaid recipients as well as those of their friends, family, and business partners. As with all bureaucratic nightmares, there are exemptions to these rules, but they all require either luck or a very well-thought-out plan that takes into consideration the specifics of the Estate Recovery Program in individual states. A new legal field, referred to as “Elder Law,” is emerging in response to issues such as estate recovery. Those seeking answers to questions about Medicaid or Elder Law should consult professionals in their own state. “Questions and Answers on Medicaid Estate Recovery for Long-Term Care Under OBRA ‘93,” a comprehensive overview of the specifics of the law provided free by the American Association of Retired Persons, can be found at www.AARP.org/research. Though the article is somewhat dated, the key findings for evaluating estate recovery in a particular state, as well as methods for engaging in public policy, hold true. Wendy Fox-Grage of the AARP Public Policy Institute reports that policy-makers have generally not examined the broader public-policy issues posed by estate recovery. “Today, state programs generally appear more well-established than they did in 1996,” she writes. “However, critical questions about estate recovery remain on whether: recovery represents a fair and equitable mechanism for ensuring that Medicaid recipients pay a fair share of the cost of their long-term care, compared to other financing options; these programs are a barrier to receipt of Medicaid services; estate recovery may contravene social policy on prevention of spousal impoverishment; and the costs justify the financial benefit to the states.” Experts say that seniors and people who are disabled should first protect their assets and then try to understand this very complicated law, including the differing roles of the state and federal governments. They recommend that people affected by estate recovery bring their concerns to the state government that is implementing the recovery process. To participate in the public policy to which states must submit, experts suggest those affected write their congressperson and try to educate their elected officials on the effect the law is having on their communities. Eleanor Canter is a freelance journalist from Muskegon, Mich. She can be contacted at eleanorcanter@yahoo.com. |
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