Federal law requires state Medicaid programs to seize the assets of people who have received certain Medicaid benefits after they pass away, even if the state would prefer not to. In many cases, this means that after an older adult or person with a disability receiving Medicaid long-term care dies, the family is forced to sell an asset, such as the family home that otherwise would have been passed down.
The minimal revenue generated by this process known as “estate recovery” is outweighed by the harms to low-income families.[1] The policy can lead a person to delay enrolling in Medicaid out of fear of losing their home, therefore 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.
Medicaid Estate Recovery Explained
Medicaid funds health and long-term care for older adults and people with disabilities who otherwise cannot afford it. In most cases, an older adult becomes eligible only after spending their life savings down to under $2,000. A home generally is exempt and not counted in determining eligibility.
Medicaid is the sole health care program that seeks to claw back expenses after the person who receives benefits dies. Specifically, federal Medicaid law requires the state to collect the costs of nursing facility care, home and community-based services, and related costs from the person’s remaining property if the person was at least 55 years old when receiving Medicaid.[2]
States can and do pursue collection for other services and from people under age 55 as well. The person’s home is no longer exempt once they pass away and is generally the main source of estate recovery.
Seizing Property Keeps Families in Poverty
Medicaid is only available to people with limited income and savings who cannot otherwise afford care. Data from the Medicaid and CHIP Payment and Access Commission (MACPAC) shows that 75% of Medicaid enrollees age 65 and older had net wealth of less than $48,500 at the time of their death.[3] Black and Hispanic individuals as well as people with disabilities (who would need long-term care) have lower average net wealth.
When Medicaid collection is pursued, surviving family members are often forced to sell the home to come up with the funds the state is seeking.[4] This deepens housing and financial instability and prevents the ability to pass down even modest assets, keeping families in poverty and widening racial and economic gaps.[5]
“Estate recovery asks [people] to make an impossible choice between their health and the financial security of their loved ones.”
Missouri Advocate
Older Adults Who Need Long-Term Care Are Penalized
Medicaid collection unfairly penalizes older adults and people with disabilities because they need long-term care. The fear of losing their home or burdening their family causes many people to delay or avoid applying for Medicaid altogether. As a result, some families go into debt to pay for care themselves, while others forgo care entirely, leading to preventable health crises and costly hospital stays.
The burden of recovery falls inequitably on families who experience unpredictable medical events, such as a family member who develops Alzheimer’s Disease and needs months or years of care. This unpredictability is exacerbated by inequities in our health care system that particularly harm lower-income and older adults of color. All these factors make estate claim collections unfair and societally counterproductive.
“Medicaid recovery is age discrimination! The system has failed me when I needed help. I also know people who refused Medicaid [due to] recovery and have no health insurance.”
Steve, a New Jersey Medicaid Enrollee
Affordable Housing and the American Dream are Undermined
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.
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. This Medicaid collection policy takes that option away from many families and undercuts access to homeownership, a core part of the American dream.
Seizing the family home also works against federal, state, and local efforts to create more affordable housing. Federal programs spend billions annually to address the dearth of affordable housing for low- and moderate-income persons. Taking homes away due to a family member’s health care needs adds to the housing affordability crisis and puts families at risk of housing precarity and homelessness as a result.
“The state’s aggressive collection on behalf of the federal government jeopardizes homeownership for families and encourages property abandonment, leading to community disinvestment.”
Missouri Advocate
Financial Benefit to States is Minimal
The primary rationale for estate recovery is financial – that recovered funds will support state Medicaid programs. This rationale is contradicted by MACPAC data, which shows that states recovered less than 1% of dollars spent on Medicaid long-term care.[6]
In each year between 2015 and 2019, states recovered only 0.53% to 0.62% of the Medicaid fee-for-service spending on long-term care.[7] These data are consistent with other examinations of estate recovery finances.[8]
Example: Recovery in Kansas Aimed at Poor Families
The HHS Office of the Inspector General’s report on estate recovery in Kansas demonstrates the minimal benefit to states compared to the devastating impact on a person’s surviving family.[9] For a sample of 30 Medicaid recipients subject to recovery, the state incurred expenses of $6,055,884 but recovered only 2.7% or $162,298.
Further, Kansas recovered these expenses almost exclusively by forcing the sale of homes of very modest value and against small estates. None of the 30 estates was worth more than $100,000, and 25 were valued at less than $11,000. The median value was only $1,532.[10]
Explore Justice in Aging’s Resources on Medicaid Estate Recovery
Endnotes
See, e.g., Justice in Aging et al., Medicaid Estate Claims: Perpetuating Poverty & Inequality for a Minimal Return (April 2021). ↑
42 U.S.C. § 1396p(b). ↑
MACPAC, Report to Congress on Medicaid and CHIP, ch.3 (Medicaid Estate Recovery: Improving Policy and Promoting Equity), at 80 (March 2021). ↑
See e.g., Justice in Aging, When States Recoup Medicaid Costs by Seizing Family Homes, Poor Families Suffer While State Budgets Are Barely Affected (May 2024). ↑
See e.g., Michele Lerner, One Home, A Lifetime of Impact, The Washington Post (Oct. 2020). ↑
MACPAC, supra note 3, at 72. ↑
Id. at 89. ↑
Naomi Karp et al., ABA Commission on Law and Aging, Medicaid Estate Recovery: A 2004 Survey of State Programs and Practices, at 51 (Table 3) (June 2005). ↑
Office of Inspector General, Department of Health and Human Services, Report A-07-22-03254 (March 2024). ↑
Because 30 is an even number, the median asset level is the mean of the 15th and 16th largest asset amounts. (1,289 + 1,774 = 3,063; 3,063 ÷ 2 = 1,531.5, rounded up to 1,532) ↑
