I Recently an article in the Iowa Quad City Times has many wondering just what the rules are requiring an heir to repay Medicaid for the cost of services to a deceased family member.
Sarah Miller received a letter from the State of Iowa asking for $277,186.96 to repay the State for medical care received at a state-run veterans home. Ms Miller is the long time companion of veteran Roger Lennon who died a few months ago.
Roger Munns, a spokesman for the Iowa Department of Human Services confirmed that the State would seek reimbursement from any assets remaining in Lennon's estate after he died. Munns said that Mr. Lennon should have known that the state would pursue any remaining assets remaining after his death.
Munns states that "everybody who gets Medicaid is told that this is a government program for which we will be expecting repayment."
Mr. Lennon gave all of his income to the State during the times he was living at the Veterans Home in Marshalltown. This income consisted of his veteran's benefits and $350 which was his share of the rental income from properties jointly owned by Ms. Miller and himself.
Ms. Miller paid the taxes and expenses of the rental properties for the last seven years. However, she was told that she could not deduct either the expenses or taxes form the estate. The only deduction the State will allow is funeral expenses. Apparently the State of Iowa has told Ms. Miller it wants half the value of these two rental properties and the payment is due next week.
How did this happen and can it happen to others? Absolutely.
Medicaid came into being in 1965. As it is a joint program between the federal government and the states, it has always included a provision allowing the states to recover from the estates of deceased Medicaid recipients.
In 1993 Congress passed the Omnibus Budget Reconciliation Act (OBRA '93) which required the states to implement a Medicaid Estate Recovery Program. The relevant provisions of the 1993 Act are as follows:
* States must pursue recovering costs for medical assistance consisting of:
* Nursing home or other long-term institutional services;
* Home- and community-based services;
* Hospital and prescription drug services provided while the recipient was receiving nursing facility or home- and community-based services; and
* At State option, any other items covered by the Medicaid State Plan.
At a minimum, states must recover from assets that pass through probate (which is governed by state law). At a maximum, states may recover any assets of the deceased recipient.
Who's estate may be seized?
According to the U.S. Department of Health and Human Services recoveries may be made from the estates of deceased persons who were 55 or older when they received benefits. Recovery could also be had if the Medicaid beneficiary was permanently institutionalized regardless of age.
States are permitted to exempt recovery if the only Medicaid benefit received is a payment of Medicare cost sharing, i.e. Medicare Part B premiums.
Of course this is made a bit more confusing because each of the states have different rules. Texas, for instance, passed a law which states Medicaid Estate Recovery Program claims will only be filed when it is cost-effective. Claims that are considered not cost-effective are those where:
* the value of the estate is $10,000 or less;
* the recoverable amount of Medicaid costs is $3,000 or less; or
* the cost of selling the property would be equal to or greater than the property's value.
Ohio has a hardship exemption. In certain circumstances when recovery from the estate is found to create an undue hardship, the right to immediate recovery may be waived by the state. The Ohio statute gives as an example a property which is the sole income producing asset of the survivor. Ms. Miller might be eligible for a hardship exemption if she lived in Ohio.
Each state has it's own rules. Federal guidelines allow the states great latitude in defining hardship exemptions. However, the federal guidelines do suggest that two kinds of property could be eligible for hardship exemptions. The suggested guidelines are homesteads of modest value and income-producing property, such as farms or family businesses that are essential to the support of a survivor.
Even though the federal guidelines seem to favor Ms. Miller, the ultimate authority to recover is with the State of Iowa.
Sheila Guilloton is the owner of Prestige Planners, a health specialty agency placing health and dental insurance for business and individuals. Licensed with all the major carriers, she counsels and advises clients on how to select the most appropriate coverage. To learn more about health insurance, health care and health care reform visit http://www.examiner.com/x-11804-Health-Care-Examiner
