Estate planning takes center-stage this week with all the talk of the PPACA, Obamacare Medicaid “death debt.” Estate planning is a worthy consideration for everyone and this article is not intended to substitute for that planning.
This article is about Medicaid recovery from estates, the buzz shared this week in articles such as that in, ”The Seattle Times,” by Carol M. Ostrom, “Expanded Medicaid’s fine print holds surprise: ‘payback’ from estate after death, (http://seattletimes.com/html/localnews/2022469957_medicaidrecoveryxml.html).
As you know, Obamacare didn’t create the ability of states to go after your estate to pay for your Medicaid expenses. But because the PPACA EXPANDS Medicaid eligibility making more people with more assets eligible for Medicaid, naturally it also increased the likelihood that there would be more assets to go after for reimbursement when a person dies.
Keep your eye on COST/BENEFIT when it comes to your state and its policies. Medicaid recovery varies by States including how many estates the state goes after. There is wide leeway in the recovery process for states. THIS HAS ALWAYS BEEN THE CASE.
One reason Obamacare may NOT increase the number of estates that states try to recover from, at least initially, is that just like the State is going after your estate to recover its costs for your care, States cannot keep money they collect that was paid for by Federal contributions to your care, since Medicaid is a combined State and Federal program. States only keep THEIR SHARE OF THE CONTRIBUTION TO YOUR CARE because otherwise States would PROFIT DIRECTLY FROM MEDICAID if they could keep all Medicaid money, not only the part they lay out but what the Federal government lays out too.
Under Obamacare, for the first few years the Federal government is paying 100 percent of costs of expanded Medicaid, which drops down to and remains at 90 percent in 2020. This is significant because actions against estates for recovery by the states have often been fewer than “possible” under the law because States don’t get to keep all of that money. Obamacare would NOT affect this rule and since it pays for so much of the expansion, States would be keeping little in terms of what they recover.
INCREASED RISK OF STATES COMING AFTER YOUR ESTATE is more a function, in my opinion, that because Obamacare Medicaid expansion increases the number of people on Medicaid it encourages and incentivizes the development and use of NEW PROCESSES, UTILIZING TECHNOLOGY that makes it EASIER for the government to track and therefore go after your assets which will INCREASE THE BENEFIT TO STATES of going after estates.
Just like other areas where technology has made it easier to track you and your life, making it easier to track assets will encourage states exercising their ability to go after estates. However, such an increase in going after estates resulting from new technologies will impact all states, not just those that adopted expanded Medicaid.
There is also the risk that the Federal Government has a greater interest in MEDICAID RECOVERY since it’s laying out more money. This means that changes to the law that incentivizes states to go after estates for recovery through the use of Federal monetary “rewards” for going after those expenses or through Federal “punishments” (such as fines) in states that don’t go after estates is also increased.
This is not unlikely since the trend is towards making it easier for state governments to go after assets to pay for Medicaid expenses. For instance, under OBRA’93, Medicaid’s ability to go after assets was increased to things like funds form an inheritance, AND increased the “lookback period” to five years, making any transfers that you make of your assets within five years of Medicaid subject to “lookback” and recovery by the state.
For consumers, it’s good the issue has been raised because it invites consumer pressure to change laws in their states that jeopardize their ability to financially survive the need for Medicaid. For instance, some states, are addressing the issue, such as Washington, as reported by Carol M. Ostrom on 12/31/13 in her article, “State files to change Medicaid policy to recover only long-term care costs,” (http://blogs.seattletimes.com/healthcarecheckup/2013/12/31/state-files-to-change-medicaid-policy-to-recover-only-long-term-care-costs/).
