If you're over 55 years old, Medicaid can come after your home and assets when you die to pay for your medical expenses. It's the most under-publicized flaw in the Affordable Care Act — though it has been covered by bigger news sites like The Seattles Times and, on Friday, The Washington Post — due to long standing estate recovery laws, the assets of deceased low-income seniors are fair game. It's also one of the least clear. Different states have different estate recovery laws, and some are changing those laws to protect new enrollees.
Is this Obamacare's fault?
No, Medicaid has been allowed to seize assets since 1993. As per the Post:
In 1993, concerned about rising Medicaid costs, Congress made it mandatory for states to try to recover money from the estates of people who used Medicaid for long-term care, which can cost taxpayers hundreds of thousands of dollars per person. They included exceptions in cases in which there is a surviving spouse, a minor child and other situations.
Congress also gave states the option to go further — to target the estates of all Medicaid recipients for any benefits they received after age 55, including routine medical care.
Emphasis added. So all states are required to seek to recoup longterm payment costs, but it's optional to attempt to recoup all medical costs.
The problem is that the Obama administration has expanded Medicaid to people with higher incomes, who are more likely to have assets worth seizing. More importantly, as the Daily Kos explains, Medicaid use to have an asset test limit: if you had more than $2,400 to your name you wouldn't qualify. Obamacare dropped that requirement.
And, obviously, Obamacare mandates that everyone have insurance, but excludes those who qualify for Medicaid from subsidies that would make private plan affordable.
Exactly. Obamacare forces people into Medicaid then steals their children's inheritance when they die?
According to the Annenberg Public Policy Center's Factcheck.org (based on a tip from "a Treasury official") it's "very unlikely" that people who decline to sign up for Medicaid will be fined for not having insurance. It may qualify as a hardship exemption. Factcheck.org also notes that there are exemptions that would prevent estate recovery:
Those who are Medicaid-eligible under the ACA also should know that the 1993 federal law bars estate recovery when there is a surviving spouse, a child under the age of 21 or a child of any age who is blind or disabled. And that there are exemptions that will allow other family members to keep the family farm or home under certain circumstances.
What's more upsetting is the fact that if someone who qualified for Medicaid made a little bit more money they'd qualify for subsidies on the exchanges. Their insurance, minus co-pays and deductibles, would be paid up front, not a liability left later on. Meanwhile 55- to 64-year-olds have the most expensive insurance plans. In The Seattle Times piece, the profiled couple decided to marry, since their combined incomes qualified them for subsidies. Their other non-Medicaid option was to pay $451 to $859 each for unsubsidized plans, or risk the house they hoped to pass down.
What if you're under 55?
Then Medicaid is essentially free. For that reason, many see estate recovery as a discriminatory death tax. "Essentially, estate recovery turns government financial help to frail seniors of modest means into a loan program with collection taking place at death," wrote elder law attorney Jeffrey Marshall.
What is the government doing about this?
Federal law requires states to attempt to recover long-term care and related costs, but many states are rolling back laws that allowed them to seize assets for all costs. Washington state changed their law in December, as did Oregon. But it would take an act of Congress to further scale back estate recovery. According to the Post, advocates have been pushing for an end to the estate recovery rule, and the government is working on... something. Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, told the Post, “We recognize [the] importance of this issue and will provide states with additional guidance in this area soon.” No word yet on what those guidelines might be.