Monday, June 17, 2019

ACA Medicaid expansion: Lien on me?

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N.B. 6/19: See second update at bottom: there is a bill in the New Jersey legislature, S3489/A5064, that would ended the pursuit of asset recovery for Medicaid enrollees who are not enrolled in long-term care.

I think it's fairly widely understood (at least by me) that Medicaid picks up the tab for long-term care only when the beneficiary has spent down her assets (if she had any), and that when the spouse of such a beneficiary passes the state can claim remaining assets, such as a house.

What I didn't know, and just learned via  New Jersey-based elder lawyer Lauren Marinaro, is that most states can recover assets from any Medicaid recipient over age 55 upon that person's death or the death of his spouse (or any children passing age 21 or blind or disabled). In most states, that's true whether or not the Medicaid enrollee obtained long-term care.

A 1993 federal law required states to recover assets from the estates of recipients of long-term care services under Medicaid. States also have the option of recovering for other Medicaid benefits obtained above age 55. As of 2014, 35 states and D.C. were recovering for other benefits.

The ACA Medicaid expansion complicated the picture. Pre-ACA, Medicaid eligibility generally included an asset test -- as it still does for Aged, Blind and Disabled (ABD) Medicaid. In states that have accepted the ACA expansion, however, Medicaid eligibility is extended to anyone* whose household income is below 139% of the Federal Poverty Level (FPL) -- or $17,236 for a single person in 2019.

There is no asset test for Medicaid eligibility under ACA expansion criteria.  But in many states (including New Jersey) anyone over age 55 who qualifies as an "expansion" enrollee (as well as any other Medicaid enrollee) is potentially subject to lien on assets and state recovery after death. In New Jersey, the tab would include total capitated premium paid to a Medicaid managed care organization (MCO) for enrollment in a managed Medicaid health plan. (A 2017 update to NJ asset recovery rules is here.)

So let's say you're 57 and own a home and have some tens of thousands of dollars in savings. You get diagnosed with cancer or have a debilitating heart attack and can no longer work, or can only do part-time contracting work. Your income slips below the Medicaid eligibility threshold, and you enroll. You are then potentially running up a tab, payable upon your death or the death of your spouse, or when your surviving children pass age 21.

There is no such liability for anyone obtaining premium tax credits (and Cost Sharing Reduction subsidies) for private marketplace coverage. For those just beyond the Medicaid eligibility line, a benchmark silver plan enhanced by CSR will cover 94% of the average enrollee's costs at a premium of no more than $60 per month (in some areas a silver plan cheaper than the benchmark is available for less, sometimes far less). For older enrollees with some assets, then, marketplace eligibility may make more sense if they have any flexibility in drawing or reporting income. Per Marinaro:
As the federal government picks up 90% of the cost of Medicaid enrollees rendered eligible by ACA criteria, one might wonder why states would bother to pursue the assets of those enrolled under this match rate. A Nov. 2015 MACPAC issue brief noted that in the wake of ACA enactment, "Connecticut, Colorado, and Washington have made amendments to their Medicaid state plans to eliminate recovery for non-LTSS benefits, and Oregon now only pursues recovery for non-LTSS services if LTSS services were also received."**  The report further notes the inequity arguably inherent in subjecting the lowest income ACA beneficiaries to asset recovery while exempting those  at higher income levels who are subsidized in the marketplace.  It also asks whether asset recovery runs counter the ACA's purpose in determining Medicaid eligibility by income only, without reference to assets.**

One further complication with high financial stakes in Jersey, and perhaps other states (courtesy of Lauren Marinaro): if a person enrolled in Medicaid via ACA criteria (income 29%--138% FPL, no Medicare eligibility) is determined to need long-term care services, the MCO will provide those services and get paid at a much higher capitation rate. From the state's model contract for MCOs effective through June 30, 2018 (p. 792), here is the cost contrast between ordinary adult coverage and various classifications of nursing care:
Moreover, a recent report by the New Jersey Office of the State Auditor found that MCOs often classify an enrollee as in need Managed Long-Term Services and Supports (MLTSS) -- and continue to charge rates for those services when the enrollee opts not to receive them. In a one-year period, the report found, "Enhanced capitation totalling $76.2 million was paid to MCOs for those MLTSS-home-based beneficiaries who opted not to utliize MLTSS services" (p. 5).  The report's "conservative" estimate was that that 16% of 17,465 home-based MLTSS beneficiaries, or 2,777, opted not to receive services requiring MLTSS enrollment while the MCO billed at the MLTSS rate.  For those without Medicare (and so under age 65), average billing rates were $7,921 per month for home-based care and $9,212 for nursing home care.

Thus, the estates of Medicaid enrollees aged 55-65 could ultimately be dunned for thousands of dollars per per month, regardless of whether the enrollee ever received services billed at those elevated rates.

UPDATE, 6/18 - two, via Twitter:

UPDATE 2, 6/18: Turns out there is a bill in the New Jersey legislature, S3489/A5064, introduced Feb. 19, 2019 by Joseph Cryan in the Senate and by Assembly reps Downey, Houghtaling and Huttle, that would limit estate recovery to long-term care. From the bill statement:
Currently, New Jersey’s Medicaid estate recovery program pursues recovery of payments provided through the Medicaid program for all services received on or after the age of 55. Under this bill, the DMAHS would be limited to pursuing recovery for costs associated with nursing facility services, home and community-based services, and hospital and prescription drug services provided concurrently with nursing facility or home and community-based services received on or after the age of 55. 
UPDATE 3, 6/20: Kathleen O'Brien, somewhere in the NJ Gannett universe, did a good job covering this issue in 2014, when the ACa Medicaid expansion was new. At that point, about 325-350 Medicaid liens were being filed yearly.

Postscript: Stepping back a day later I have to say: this is a really horrific ACA glitch, potentially affecting a lot of people -- some 12 million people have been enrolled in Medicaid under expansion criteria, and a good number of them must be over 55. I think it's well understood that Medicaid will seek to recoup nursing care costs from an estate after the beneficiary and spouse have died. But to put a lien on ordinary Medicaid enrollment is fundamentally fraudulent -- especially when enrollment in affordable health insurance is mandated by law. The two articles linked to in the note below bring this home in personal narratives.  And as for Jersey: I suspect the state could recoup more from Medicaid MCOs fraudulently billing for MLTSS services not delivered than they can from Medicaid expansion enrollees.

UPDATE 4, 4/7/21: UPDATE 3 (4/7/21) Courtesy of frequent xpostfactoid commenter Bob Hertz: MACPAC's 2021 Report to Congress on Medicaid and CHIP was released in March, and it includes a chapter (3) on Medicaid Estate Recovery. While the report is focused almost exclusively on recovery for LTSS services, it also relays that 20 states and D.C. currently pursue estate recovery for the Medicaid expansion population. It also reveals that estate recovery in all states yielded a grand total of $773 million in 2019. As Bob Hertz puts it, "This is barely a raised dimple in the overall Medicaid program and not worth the fear and torment that is caused." LTSS recoveries in New Jersey were $13.8 million in 2019 and ranged from $12.2 million to $18.6 million from 2015-2019. The map below is from pdf page 47 (report pg. 117) of the MACPAC report.


* Anyone, that is, except legally present noncitizens subject to a federal "5-year bar" to Medicaid enrollment, or even longer waiting periods imposed by some states. Those who are time-barred from Medicaid are eligible for ACA marketplace subsidies even if their income is in Medicaid range (0-138% FPL) -- in which case they pay 2% of income for a benchmark silver plan, enhanced by CSR to an actuarial value of 94%. Undocumented immigrants are not eligible for full Medicaid coverage or marketplace subsidies.

** The MACPAC brief also notes several media stories in 2014 and 2015 about the liens, including this from KHN and this from the WSJ. This is not new, just new to me (and I suspect to a lot of people).


  1. Thanks for the pointers. A neighbor of mine was partly responsible for the Minnesota exemption noted above.
    This is a classic illustration of "programs just for the poor are poor programs." We need the clarity to accept the fact that Americans are aging, and some will need long term care, and either we force people to save for it (fat chance!), or we collect taxes to cover it. Germany added about 2% to their Social Security tax to have a public long term care insurance benefit.

    1. Hi Bob,

      Since learning about the issue last summer, I have contacted and become a friend of your neighbor Rick, who is the fellow here that you mentioned:

      He has had some success in MN, as you and others point out.

      Still, he is worried the state will change back. Including, possibly, retroactively. (That is, though they didn't estate recover expanded Medicaid last year, perhaps they can decide retroactively to go after last year's expanded Medicaid capitations or all bills paid out.)

      He has good reason to worry about that. He pointed me to the CURRENT MN ACA Application (with help paying costs)

      and look what it says on adobe p. 21:

      "If anyone on this application is eligible for Medical Assistance, I have read and understand that the state may claim repayment for the
      cost of medical care, or the cost of the premiums paid for care, from my estate or my spouse’s estate"

      As if they didn't stop estate recovery on expanded Medicaid!

      Notice also that they retain either option: recovery of a capitation premium, or of all medical expenses paid out.

      Recovery of all medical expenses paid out means the person NEVER HAD INSURANCE at all. (And recall, the grounds for the mandate, when it was in affect, was to make insurance work! Still, NJ and MA have a mandate, and do still do the recovery on non-LTC!)

  2. Your experience seems to be similar to mine.

    I thought I understood the ACA, but in 2019, I learned about the Medicaid estate recovery on ACA expanded Medicaid and other non-long-term-care Medicaids, still done in 10-14 states that have expanded Medicaid.

    I was shocked.

    About 20% of people get a Medicaid as their health insurance under the ACA and the prior traditional Medicaid system. In the states that still estate recover non-long-term-care expenses, those 55-64, about 4% of the population, don't have insurance. They have a loan for UNINSURED medical expenses. There is no insurance at all!

    (Not only do we have 9% uninsured at the moment, 1%-2% only due to failure to expand Medicaid in 12 states, but as well, in many states, the insured percent from the Census is phony--4% of the people have just a loan and no insurance!)

    I reacted to discovery of the problem by expanded the Wikipedia article on Medicaid estate recovery to include this aspect. (Facts reflect status last year: about 8 states did correct the problem, still leaving perhaps 10-14.)

    Note: The Wikipedia article is under contention, and may be removed, or the key content taken out. (Even though no mistakes have been found in the year since it has been up. Therefore, let me give the backup link to the Wayback Machine version: )

    Also note: I do try to publicize the issue as much as I can, often in the NY Times comments section. ( E.g. )

    Also, I did a page designed for MA, my own state, which (surprisingly) has the problem. (Someone actually got a bill placed in the legislature to fix the issue, but it is not likely to pass.)

    Also, note:

    The ACA has other defects, including affordability. I tried adding a "Problems" section to the ACA article last summer, including 5 problems, with the Medicaid estate recovery as one of them.

    However, due to editor dispute, it was taken out a year later, and no longer appears.

    (This is a backup version of that: )

    In any case, since the issue has not been publicized since 2015, except in places where there was substantial activism, my assumption is the press is avoiding the issue intentionally, to not make the ACA look bad.

    1. Leo Y and Andrew and others interested:

      Back in early 2014, when the ACA main provisions went into effect, there was a tiny bit of coverage in the press of this issue. The NY Times I believe completely ignored it, but it was in the Washington Post once, here (Jan 2014):

      It's interesting to look at the quote in that article from Matt Salo, the executive director of the National Association of Medicaid Directors (still in that position).

      ' It wouldn’t make sense for a state to pursue a claim on the property of a new Medicaid recipient under the health-care law, said Matt Salo, executive director of the National Association of Medicaid Directors.

      “There’s no way any state is going to see it as cost-effective or politically sensible to do that,” he said. “It’s a scare tactic.” '

      Well, of course, he was wrong, and has made no public acknowledgement of that, as far as I can tell.

      (Because, through 2017, Minnesota held on fiercely to the estate recovery on expanded Medicaid, as the Rick Rayburn in MN experience, and quotes from the state officials in MN papers show us.

      Further, apparently New Jersey is explicitly threatening the people of NJ and I presume Leo. And as well, at least a total of 12 states appear to have recovery of expanded Medicaid in their recovery policies, 7 years after ACA main provisions, and perhaps 20 recover other non-long-term-care Medicaids.)

      (Some states that did recover expanded Medicaid in their estate recovery policies did amend their recovery policies not to recover that. These include NY, CT, OR, WA, CO in around 2014, and CA and MN around 2017. I have links to documentation of this in that Wikipedia article on Medicaid estate recovery that I expanded from a stub in 2019.)

  3. I am really hoping NJ bill will pass. I wrote to Senator Cryan. My late Mom has a lien on her modest apartment, which eats up most of it. How is that fair? All non-LTSS Medicaid. Medicare spent a lot more on her, no recovery. Why should NJ recover more than federally mandated requirements and cause grief for what appears to be a drop in the bucket for the program?

    1. This comment has been removed by the author.

    2. Hi Leo:

      I am a guy who found out about the Medicaid estate recovery on non-LTSS in 2019, not expecting such an absurdity.

      Post ACA, we would expect we all have the opportunity to get affordable REAL (not a loan) health insurance. (This is what happens in the rest of the developed world--no one gets just a loan until death for medical expenses, at least for non-long-term care. Not all developed countries have universal long-term-care insurance systems--some do, like Germany--but all have ordinary medical insurance systems that don't, for any people, offer just a loan.)

      The current system, in the roughly 12 states (including your blue NJ, and blue MA and MD as well) that estate recover non-long-term-care Medicaids (for people 55-64) completely messes up the ACA. In some cases, the state apparently recovers all medical expenses paid out--the person had no insurance at all. In other cases, a capitation, which is like a loan for premium.)

      It's an outrageous bungling of policy.

      (At the moment, people above 138% FPL get real insurance, highly and often 100% or otherwise highly subsidized from subsidized on-exchange plans. Below 138% FPL, and regardless of assets--there is no asset test on expanded Medicaid--people get expanded Medicaid and are blocked by that eligibility from subsidized on-exchange plans by ACA rules. It's actually common to get expanded Medicaid from the ACA for people with assets to lose, and they get taken by surprise, since estate recovery notice is missing on the Federal ACA application: see adibe o, 8) and inconspicuous in other states.

      (Cases of people with lots of assets: pausing work for a few months--since expanded Medicaid eligibility is often determined monthly, self-employed without contracts for a few month, unemployed for a bit, early retired. All of these groups with substantial assets to lose get sucked in. As well as working poor, that we should be allowing to accumulate modest intergenerational wealth.)

      The New York Times seems to have never covered the issue. The Washington Post only once, in 2014. The press is being either incompetent here, or intentionally covering up.

      Note Andrew has another post on this, calling for the repair:

      And also there is a good reference, from me, adding info to Wikipedia in 2019, when I first found out about the issue:

      (assertions can be verified from the references, which are all online)

      Backed up, in case someone pulls content from the article:

    3. More for Leo and any others, given the possibility that this page from xpostfactoid may come up in search on that issue:

      The Obama administration knew there was a problem estate recovering on expanded Medicaid, and in Feb 2014, attempted to stop the states from estate recovering it.

      That is documented here:

      in Tim Jost's sharp Health Affairs "Following the ACA" blog. (I think Health Affairs has dropped the ball on the issue since, however.)

      Tim links to the letter requesting the states not estate recover expanded Medicaid and saying the administration would do everything in its power to stop it here:

      stating precisely:

      "Due to the potential barrier to enrollment that future estate recovery may create for some individuals, CMS intends to thoroughly explore options and to use any available authorities to eliminate recovery of Medicaid benefits consisting of items or services other than long term care and related services in the case of individuals who are determined eligible for Medicaid benefits using the MAGI methodology."

      Actually, the reason given by the Obama administration, "potential barrier to enrollment that future estate recovery may create for some individuals" is one of several reasons, and the letter is lame for not stating the other reasons.

      The other reasons are:

      a)With the estate recovery, we're simply not giving everyone the option to get affordable real, not-a-loan health insurance like the rest of the developed world gives its people, or single-payer U.S. would.

      b)Certain people of lower income (but not dirt poor) had pre-existing-condition screened insurance at a relatively low premium pre-ACA. They dropped it owing to the ACA, and got expanded Medicaid. Realizing the recovery, they cannot now afford the only option they have for real insurance: unsubsidized on-exchange (with high-prices due to no pre-existing-condition screening, and since expanded Medicaid eligibility blocks subsidized on-exchange coverage by ACA rules.)

      c)The ACA becomes a dangerous contraption for people, as dropping below 138% FPL regardless of assets exposes one to liability possibly for all medical expenses paid out. (People with assets to lose are affected: unemployed, early retired, people without contracts for a few months, or taking a few months off.)

      So the reason the Obama administration gave, "some people won't sign up", sounds like they assumed all of the state Medicaid agencies are full of people who can't understand much, but they realized their job is to run around with clipboards and get people to sign up, so that's what they put in the letter.

    4. Norm, thank you for your feedback and focus on this matter. I spoke to elder care attorney, who was willing to negotiate with the state. They wouldn’t even do that. My only hope is the Cryan bill in NJ. Or something happening at the federal level to abolish this nonsense. The text of Cryan bill actually says that non-LTSS will apply to all estates created since 1990s. I guess that means that they will have to refund those from who. they have already recovered. Not sure how this will work in practice. From my Mom, they have not recovered, it is a lien at this point. Incidentally, my Mom did not get Medicaid under ACA, but recovery is still unfair.
      You are right, in Europe they pay for medical care to their citizens, not merely loan it out to those who have something to take from after death.
      Surprisingly, there is little reaction to this from the public. I guess,there are two reasons. Most recipients don’t have any assets at all. And also, those who qualified for Medicaid expansion under ACA and do own their houses are alive and well, God bless them. They don’t understand what’s in store for their heirs once they pass on. My Mom certainly didn’t. I did, but I didn’t want to upset her, so I didn’t tell. It was too late to change anything anyhow.