Aging Well: News & Insights for Seniors and Caregivers
Most people need Medicaid to afford paid long-term care. To qualify for Medicaid, individuals must have very limited income and few assets. Those with modest means must exhaust a lifetime of savings before they become eligible. The home they live in is exempt under Medicaid eligibility rules. However, after a person receiving Medicaid long-term care dies, federal law requires states to attempt to collect the costs of that care from their remaining property. The Medicaid program refers to this process as “estate recovery.”
Forcing states to collect Medicaid costs is harmful. It can lead a person to delay enrolling in Medicaid out of fear of losing their home, compromising their health. It can also deny a family the opportunity to pass on their home to the next generation and help secure their economic future. In this way, the policy perpetuates poverty and disproportionately harms economically oppressed communities and people of color who have faced barriers to building intergenerational wealth.
This messaging guide provides recommendations to help advocates explain the harms of Medicaid estate recovery to policymakers and the public.
Avoid Terminology that Can Be Misunderstood
While the technical term “estate” refers to the property an individual owns at death, many people associate the word with significant wealth. The term’s common usage stands in stark contrast to the reality of people enrolled in Medicaid. Instead, use terms like “home,” “property,” or “savings” to describe what is actually being taken away.
The term “recovery” conveys that the state is reclaiming something it is owed, a premise that goes against Medicaid’s purpose. Instead, use terms like “collection” or “seizure.”
Recommendation One
Set the foundation for why this policy is harmful.
Medicaid is an antipoverty program that is only available to people with limited income and savings who cannot otherwise afford care. For a state to later seize the person’s few remaining resources goes against Medicaid’s purpose and keeps families in poverty.
Key points:
- People with Medicaid have little to no assets. Data shows that 75% of Medicaid enrollees age 65 and older had net wealth of less than $48,500 at their death. Black and Hispanic individuals as well as people with disabilities (who would need long-term care) have lower average net wealth.
- Without Medicaid, people don’t get the care they need—with sometimes fatal results. Many older adults need long-term care after a fall or a stroke, or due to dementia or other progressive disabilities. Unfortunately, this policy leads some to delay applying for Medicaid out of fear of losing their home or burdening their families. This results in taking on costs of care and medical debt, more expensive care later on, and worse outcomes, including premature death.
- No other health insurance or public benefits program requires benefits to be repaid. Basic needs programs like Medicaid are supposed to help people out of poverty. Instead, this policy of collecting on correctly paid benefits effectively turns Medicaid into a loan that families who rely on Medicaid cannot afford to repay.
- The harm of the collection itself falls on the family without any regard to their financial situation. Family members often provided caregiving to their loved one at their own expense, perhaps even cutting back on their own earnings or leaving the workforce altogether. Even a small inheritance could be lifechanging for a child or grandchild—or lifesaving for an heir who has fallen on hard times.
- The policy perpetuates poverty by forcing the next generation to start from scratch. It forecloses the opportunity for one generation’s hard work to provide the foundation for financial security for the next generation.
- The cost to the family far outweighs any benefit to the state. Data shows that states collect less than 1% of the long-term care costs incurred when they seize property. While this money is of nominal value to the state, a few thousand dollars could enable a child or grandchild go to school, start a business, or buy their own home.
Recommendation Two
Focus on the primary harm: loss of the family home.
Long-term care is expensive, which means that the state can easily be pursuing hundreds of thousands of dollars under this policy. The state often seizes the person’s house because it is their most valuable asset, and they have already spent any savings they had in order to become eligible for Medicaid. The result is that homes are sold rather than kept in the family.
Key points:
- Homeownership is at the core of the American dream. Older adults who worked and saved for many years to buy a modest home expect that it will be passed on to their loved ones after they die.
- Home ownership is key to financial security. For working class families, homeownership is the means to build intergenerational wealth and ensure that their children and grandchildren have a solid foundation to thrive.
- The home may be more than a place to live. It may be a source of income for the family, like a farm.
- Taking away home ownership impacts whole communities. By displacing families and tying up homes in long legal proceedings, the negative impact of home seizure can also ripple through neighborhoods and communities.
Explore Justice in Aging’s Resources on Medicaid Estate Recovery
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