Hannah Diamond: Hello everyone, and welcome to today’s webinar entitled Medicaid Estate Recovery: State Strategies to Mitigate Harm. My name is Hannah Diamond. I’m the director of state partnerships here at Justice in Aging. Today, I’m joined by my colleague, Gelila Selassie, Director of Health Advocacy at Justice in Aging, and Tim Engelhardt, Executive Director at the Aging and Disability Health Policy Lab. Next slide, please.
Before we begin, we’d like to go over a few logistics. All participants are on mute, but we welcome your participation in today’s presentation through the Q&A function in the Zoom control panel. Also available in the Zoom control panel is the CC button, which enables closed captioning. I will be watching the participant questions as they come in throughout the webinar, and I will uplift high level themes during the Q&A segment at the end of today’s presentation. Any questions that are unanswered in today’s webinar will be addressed via follow-up via email. You can also use the Q&A function to request technical assistance in Zoom, and our staff will do our best to assist you.
This webinar is being recorded, and after the conclusion of the webinar, the slides and the recording of today’s presentation will be available on our website and will be emailed to all registrants. We would also appreciate your participation in our post-webinar survey that will pop up on your screen following the close of the webinar. We are also providing American Sign Language interpretation on this webinar. The ASL interpreter will stay on video throughout the training to provide this service. You have the option to pin the interpreter’s video box to maximize your view of the interpreter. To do this, click their video, then select the pin icon. Next slide, please.
So here are our presenters. As I said, my name is Hannah Diamond. I’m the moderator of today’s conversation, and I’m joined by Gelila Selassie at Justice in Aging, and Tim Engelhardt at the Aging and Disability Health Policy Lab. I will note that all of our contact information is included within these slides so you can reach us after for any additional follow-up. Next slide, please.
So I’m going to provide a bit of information about Justice in Aging as I’m representing the organization. And then when Tim Engelhardt goes for his portion of the presentation, he’s going to share more about the Aging and Disability Health Policy Lab. So Justice in Aging is a national organization that uses the power of law to fight senior poverty by securing access to affordable healthcare, economic security, and the courts for older adults with limited resources. We’ve been doing this work since 1972, and our efforts are primarily focused on fighting for people who have been marginalized and excluded from justice, such as women, people of color, LGBTQ+ individuals, and people with limited English proficiency. Next slide, please.
We wanted to share with you our commitment to justice. We believe that to advance justice in aging, we must ensure that everyone has access to what they need as they age without discrimination and regardless of race, gender, gender identity, sexual orientation, ability, language, or country of origin. We push for policies that will ensure that those experiencing the greatest barriers to economic security, healthcare and housing can access their rights and fully access the services and programs they need. Next slide, please. So here’s our high level agenda. We’re going to start with discussing the federal requirements regarding Medicaid estate recovery, specifically which populations and services are subject to the federal minimums. You’re going to hear from our presenters about the impact of this policy, particularly its disproportionate impact on low-income communities and communities of color. And then we’re going to discuss the variation across states regarding the scope of recovery.
Then you’re going to hear about what’s possible in terms of mitigation strategies and opportunities to reduce harms on impacted individuals. So from the lab, you’re going to hear about model policies that you can use in your states to reduce the scope of recovery and protect particular populations. And then we’re also going to cover messaging to help with demonstrating the impact and advancing the policy solutions that are discussed within this presentation. And then we’re going to have time for Q&A at the end. Next slide please.
So in order to get us grounded in this content, we wanted to start the discussion with stories that demonstrate the impact of this policy. Next slide please. So we have stories here that we’re going to uplift from two impacted family members, and they show how devastating this policy is, the impact on the family and the family home, and also the surprise surrounding this policy. So first I’m going to read a little description of the situation and then I’m going to uplift the individual’s words.
Imani cared for her mom as her Alzheimer’s progressed. However, when Imani was diagnosed with breast cancer, she needed additional help. She sought Medicaid for her mom and drained her mom’s savings towards assisted living so her mother would qualify for the program. Only after her mother died was Imani told she would have to pay back $225,000. And this is in the words of the daughter about her mother. “She fought hard for equal pay and equal rights. Just to see that ripped away because she was sick and I was sick, it’s just absolutely devastating.” Next slide please.
Here we have another example of Rebecca from Ohio. Rebecca cared for her father in his fully paid off home for years after his Parkinson’s diagnosis. After his death, she received a claim on the home for $56,000, which shocked Rebecca since he never had a nurse or entered a nursing home. She only learns about a possible hardship waiver after the deadline passed, which is a mitigation strategy that will be discussed. And in the words of Rebecca, “This is the only real home I’ve ever known. I feel like now I’m going to be homeless because of all of this. My dad didn’t know that.” Next slide please.
And now I’m going to pass it off to Gelila to tell us more about Medicaid estate recovery.
Gelila Selassie: Thank you so much, Hannah. So as Hannah uplifted those stories to show the devastating effects of Medicaid estate recovery, we’re going to cover a little bit of the background of this law. Since 1993, federal law requires states to recover Medicaid costs that are incurred for long-term services and support. So that’s LTSS is the acronym, and that includes nursing home care as well as home and community-based services or HCBS. This means that the state can take away an individual’s assets or property after they die solely because they needed Medicaid for long-term care. And we’ll discuss this a little bit more about when we discuss messaging. When we’re talking about estate recovery, we’re almost always talking about somebody’s house and money in their accounts.
And so in terms of what the scope of recovery is, just like with many other aspects of Medicaid, there are federal requirements that states must comply with as a minimum barrier, as a minimum qualification. And then there’s also some additional state options. At the federal level, states must recover from Medicaid beneficiaries age 55 plus who received LTSS and individuals who at any age who are permanently institutionalized. The service recovered include long-term care institutions, so services going towards long-term care institutions, HCBS, which as we saw in the earlier example with Rebecca was really surprising, not realizing that care received in a person’s home could still mean that they’re subject to a state recovery, as well as associated costs for LTSS enrollees like hospital services and prescription drugs.
One really important thing to note is that states cannot recover from the Medicare savings program. So any premium payments that the state made for low income Medicaid Medicare dual eligibles as part of a Medicare savings program or any out-of-pocket costs that the state may have paid for under the Medicare savings program, that cannot be included. And I also failed to mention that this is the only federal means tested program that has this sort of requirement to pay the state back. It does not exist in any other healthcare or nutritional program.
A state recovery initially only applied to assets that would pass through the probate process. However, states were later given the option to expand recovery to virtually any property passed by the decedent. So in addition to assets that would typically go through probate, the state can opt to include other assets like trust, life insurance, life estate, excuse me, and joint tenancies. Federal law also places really important limits on when states can recover their Medicaid costs. States are prohibited from recovering against a beneficiary’s estate while certain family members are still living. So specifically, this would be if there’s a surviving spouse, a minor child under 21, or a child of any age who meets Social Security Administration standard for disability.
When we talk about these deferrals, deferral means that the state can still recover the asset, but it can’t collect until that spouse or minor disabled child passes away. And claims can be deferred against all heirs, even if only one heir is a minor child or a disabled child. States can choose to further limit recovery or delay claims even more, which we’ll discuss through waivers, hardship provisions, or even broader deferral policies. And some states take advantage of these flexibilities in order to limit recovery even further while other states unfortunately don’t and keep a state recovery pretty broad, which is going to cause some really significant hardship for this Medicaid population.
So when we talk about the Medicaid population, and one thing that makes a state recovery so frustrating is that by definition, Medicaid enrollees have very limited resources, otherwise they would not be on Medicaid, especially for long-term services and supports. In many states, enrollees have to spend down pretty much almost all of their assets, save a couple thousand dollars or so, and they also have to direct their income towards their care. So most states have a personal needs allowance that can be as little as $30 a month and anything other than that $30 is going to Medicaid.
So there’s no money left when they pass because of virtue of becoming eligible for this program already, like we saw in the example with Imani. So here we have a breakdown of the net wealth of Medicaid enrollees from MACPAC, the Medicaid and CHIP Payment Access Commissions, which had a fantastic report and recommendations on Medicaid estate recovery. If you can see the bottom quartile of individuals have less than $300 in net wealth, excuse me, bottom half have $300 in wealth and the bottom quartile have $14,000 in debt. They’re in the red. They have no money to give. So on top of that, even though the average wealth across all Medicaid enrollees is $44,393, when you break it down by the most indigent and the most greatest number of people, you can see that there’s a pretty big spread across the Medicaid population and that spread does heavily veer towards very, very little, hardly $0 or being fully indebted.
And since we’re usually talking about the home when we’re talking about estate recovery, it’s important to look at the equity in these homes that the state is recovering from. Across the board, average equity for all enrollees is $27,364 with the bottom half of the enrollees having $8 or less in equity and three quarters of all enrollees having about $12,000 or less in equity. Again, we’re not talking about a significant amount of money, which our colleague over at the lab will discuss a little bit more. And again, you still have a quarter of Medicaid recipients in having no equity in their house being indebted still.
So what is the impact of Medicaid estate recovery? It’s huge and it’s pretty bad. First, it can create a sort of chilling effect where older adults and people with disabilities are deterred from applying for Medicaid or for LTSS for fear of their heirs losing their family home. And then because we have a very fractured long-term care system, Medicare offers virtually no long-term care benefit and most people can’t afford private pay or private long-term care insurance. So that means that Medicaid is the only option. If people don’t enroll in Medicaid out of fear of estate recovery, that means they’re going without their long-term care needs, they’re not being met and that can lead to really dire health consequences long-term. Medicare estate recovery also in fact greatly impacts their surviving family members by effectively penalizing home-ownership and forcing heirs to pay a massive debt or forfeit their family home.
As you said, Medicaid enrollees homes are pretty much the only assets we’re talking about and the only things they have to leave their children or their grandchildren. Home-ownership and the passing of home-ownership can help really alleviate intergenerational poverty and build just basic modest wealth. But again, estate recovery prevents that. And this is especially problematic for communities of color that rely on Medicaid who faced a significantly larger wealth gap and now that’s only getting worse once their family home is taken away under estate recovery. So that’s the impact of Medicaid estate recovery.
When we’re looking at what’s the burden of it’s pretty clear that low income families without means have least protections against Medicaid estate recovery. So if we’re thinking about the bottom quartile or the bottom half or even the bottom three quarters of those Medicaid enrollees and their incomes, those individuals are subject to estate recovery, but probably don’t have the means or the abilities to utilize an elder law attorney or trust attorney, a financial planner. They don’t have access to individuals and resources to help them shield their assets from estate recovery. And so there’s a sort of double whammy there where not only do you have to be subject to this program, but it inadvertently penalizes the most vulnerable who don’t have the means to get around those rules. And then as we’ve mentioned, there’s a huge disparity on communities of color and the wealth gap that’s created or exacerbated rather because of this.
And then because most people need long-term care after something like a stroke or an accident of some sort, it’s really putting families really in a position where they’re going to have to make these really hard decisions in the face of an unpredictable medical crisis.
So with that, we’ll discuss some of the options that states can take. As with almost every Medicaid program, which we’ve said through many of our Justice and Aging webinars, Medicaid varies greatly as does estate recovery. There’s even more variations across states. So we’re just going to provide a few examples and sort of a broad overview of what’s available for states without getting too in the weeds on any particular state. So as you said, Medicaid estate recovery is a federal policy with some flexibilities given to states to potentially mitigate the harms of recovery. First, the state can limit the scope of recovery by only requiring the minimum amount required under the law. So this means that the state is only going to apply recovery to people who are age 55 plus using LTSS or individuals of any age who are permanently institutionalized and they choose not to expand recovery to any other population beyond those groups.
In terms of services, the state would only recover for services like nursing facility care, HCBS and costs associated with LTSS like prescription drugs or hospital stays. And states can also choose to limit the definition of the estate only to those that would pass through probate. So they’re not looking at any assets outside of their probated assets. One other really interesting thing to note, as states are increasingly using managed care, particularly in LTSS, it’s really important to note that managed care and recovery from managed care can get a little bit complicated here. Under a managed care system, the state pays a managed care plan a capitated or set monthly rate for each enrollee. So this is different from traditional fee for service where for each service that’s rendered, the state pays for that as it comes through. In this case, there’s a set amount paid regardless how little or how many services that individual receives.
So when it comes to Medicaid estate recovery, several states just recover the monthly amount of money, the capitated rate that the state is paying, but that individual could have actually used way less. And so the idea is that states can actually make sure that the amount that they’re recovering from is only for the actual cost of the services rendered under the managed care system as opposed to the full monthly payment that the state has paid. The state can also expand deferrals for more family members or utilize hardship waivers, which we’ll discuss in a minute. So one example for a deferral could be that a state could decide to expand deferrals to domestic partners of the deceased instead of just their spouses. And then waivers like hardship waivers differ from deferrals because they don’t just delay the recovery, they actually stop the state from recovering at all.
And states can also apply a cost-effectiveness threshold, which Tim will discuss, where the state just won’t recover because essentially the value of the property is below a certain threshold that makes recovery a bit moot. And lastly, but crucially, states have to provide better information on notice and education on a state recovery. We’ll talk about this as part of our advocacy tips, but a huge problem as we’ve seen in our examples that Hannah read out is that people don’t know about this policy and they don’t know about the ways to mitigate the policy or get around it. And so, one big thing that states have the option to do and need to do a better job on is that opportunity for notice, responding to different notices and just education across the board.
So now moving on to hardship waivers. Federal law requires states to establish a process or procedure to waive recovery if it would cause hardship. This can be full waivers where the state doesn’t recover at all or a partial waiver where the state waives a portion of the amount that the individual, the family would have to pay. Now the statute just says that there has to be a procedure in place. It does not give the definition of a hardship. And as we’ll discuss in a limit, this goes to why hardships have a lot of limitations and challenges. But generally states will provide hardships, often do provide hardships for families with low incomes, those who use public benefits or who face homelessness or significant hardship if the state sought recovery. And we have an example of those waivers listed here, the income-based waiver, deprivation of necessities of life and public benefit utilization.
There are also waivers for assets that generate income like farms or businesses. There can be a waiver if the deceased caregiver provided care for the deceased, including if they help prevent that decedent from needing long-term care under Medicaid because of the care provided. And then there’s often waivers for homes of modest value, which we’ll discuss in a bit.
So there are many issues with hardships. If you thought during that earlier slide when I was saying that there are hardships for people who have low income or utilize public benefits or at risk of homelessness, I hope you were thinking, isn’t that pretty much everybody? We saw how little savings and equity the Medicaid population has. And that’s one of the biggest problems here is that by definition, almost by definition, needing Medicaid is in itself a hardship. No one is receiving Medicaid if they are in a position where they can just lose their home and be okay. And so that’s one of the big limitations with hardships, just sort of across the board challenge with it.
Individuals and families, as we mentioned, are also often unaware they exist due to lack of notice. When individuals are aware, there’s often a very short period of time for them to submit a waiver for a hardship. The process can be incredibly burdensome and require a lot of paperwork, often requires the help of an attorney. And as I mentioned, approvals can be rare because if we were following what clearly is a hardship, then almost everybody in this Medicaid program would be receiving a hardship. So approvals can be very rare. It’s unclear what the mechanisms for approval are, particularly because there’s no good federal definition of a hardship. So those are the challenges. We don’t really see hardships as an area of massive advocacy because this underlying policy is so bad.
However, even though hardships are not a fix to Medicaid estate recovery, if you have a client who’s eligible or you know anybody who’s undergoing this process and might qualify for a hardship, we want to make sure that they do that. So that’s why we bring it up here, not because hardships are so great, but because they do exist, and until the problems of Medicaid estate recovery are resolved more comprehensively, we want to make sure that individuals do utilize it if they’re eligible for it.
So I’m just quickly going to touch on waivers for homes of modest value. It’s going to sort of feed into some of the information that the lab is going to provide on cost-effectiveness, but about 10 states offer waivers for homes of modest value where there’s no set price threshold as to what a modest value is, but CMS does recommend about 50% of the median price for that county, although a couple states do offer set price thresholds. And so this is similar to the cost-effectiveness threshold, except the value might be a little bit higher because you could have higher, very high income counties where homes values are very high. And so the median amount of that could be potentially beneficial to individuals undergoing a state recovery. However, it does require the heirs to submit a waiver application timely. And again, that poses many procedural problems as well, particularly if a state isn’t great about making that clear.
Before I turn it over to Tim, I wanted to share something really important about how do I know what’s happening in my state? As I said, we can’t go into the details of every state, so how do you know where to look? Because there’s so many flexibilities and variations, we have a few recommendations here of where to look. I’d actually recommend starting first with this fantastic guide, if I may say so, that Justice and Aging put together that’s linked at the bottom where we actually link and cite to every state’s estate recovery policy and state plan amendment.
After that, if you can’t find the information there, the other thing we’d recommend looking at is your state’s Medicaid policy manual or agency guidance. Every state has some sort of sub-regulatory guidance that serves as the closest thing we get in Medicaid to an instruction manual. And it’s made to help Medicaid workers processing applications, taking applications, understand these policies and actually apply them. So I find those to be actually incredibly helpful, whereas the statutory language or regulatory language, those are great, but they’re less clear. They’re not written in a way that’s meant to actually help implement the policy usually. And then it’s usually more helpful as a reference to find a definition or to clarify something.
After the Medicaid policy manual and the agency guidance and the statutes, the other place to look is in the state plans or state plan amendments, which we’ve, as I said, linked to in our guide. I will say estate plans can be very wonky and long, so it can be hard to see, but estate recovery policies should be there. So that’s where we recommend looking for your state specific policies. With that, I’ll turn it over to Tim.
Tim Engelhardt: Thank you. Gelila made it really clear. We can go to the next slide. Gelila made it really clear that federal law currently requires states to administer this thing called Medicaid estate recovery, but states have a lot of flexibility in how they do it and it hasn’t gotten a lot of national attention, but states have been doing things in recent years to mitigate some of the harms of this process. And I want to highlight just a few policy options that we hope more states will consider. Next slide. I’m with the Aging and Disability Health Policy Lab where our mission is to advance state and federal policies that improve access to healthcare and HCBS for older adults and people with disabilities. And we do that in part by drafting model policies and model legislation, trying to give people like you simpler building blocks for meaningful forward policy change.
We focused on this topic that we’re talking about here today because it is a barrier that dissuades some people from getting the services that they need. And if you visit our website through this QR code, you can find both federal and state policies to limit the extent to which states seize private property, either through Medicaid, estate recovery, some other related mechanisms. And on that website, we actually include legislative language and analysis meant to be pretty digestible and easy. So please check it out when you get the time.
I’m going to focus only on the state policies here. Before I do, just one preface. We, the lab, we designed these things as pieces of legislation, but states differ in the extent to which their state recovery policies are in law versus reg, and there are probably numerous states where policies that I describe in the context of legislation can probably be accomplished administratively. So take everything I say about legislation with the reality that in some states that those are things that can be accomplished without the need for the legislature passing a law. Next slide.
If you’re on this webinar and you listened to Gelila, you already have a sense of why some of these policies Are really important to people and families, but there are also implications for government efficiency and for the local economy, more on those in a few minutes. I’m also going to reference the things called ABLE accounts. These are savings accounts that allow people with disabilities to save money for disability related expenses without losing Medicaid coverage or access to other public benefits. I invoke them here because money left in an ABLE account after the account holder dies is in fact subject to Medicaid estate recovery based on some CMS policies in the same way that other assets are.
There’s a little bit of a legal distinction here because under a separate legal authority, states can also choose to recover the costs of any Medicaid services received after a person starts an ABLE account, regardless of that person’s age. It’s through a similar process, but it’s actually known as Medicaid payback. The distinction probably doesn’t really matter here, but I just wanted to flag that there’s some slight nuance when I reference ABLE accounts. All right, next slide. All right, I’m going to go into three policies. Again, you can find the actual versions of these on our website, but here we go.
Federal law requires states to do this thing called a state recovery, but Congress has an independent advisory committee on Medicaid and that group is called MACPAC. And MACPAC has actually recommended that Congress make Medicaid estate recovery optional for states. States, all of us, but states can wait and see if that happens. And if it does happen, then they can decide what to do. But there’s another choice, the kind of choice that states have used on other policy issues in the past, and that’s passing something we would refer to as a trigger law. Under this version of a trigger law, the state legislature would require that the state Medicaid agency opt out of doing Medicaid estate recovery if and when Congress makes that option available. Why bother? Well, in the short term, passing a trigger law like this at the state level would be kind of symbolic.
After all, Congress might never act on this, but it’s still a powerful statement, especially if you are in a state that has already taken a lot of the steps to minimize the effects of a state recovery already. Also, depending on state budget rules, a trigger law passed now may be a feasible and low cost option that in fact has no immediate impacts on a state budget, which makes it something worth considering even in some tough budgetary times.
Now, if and when Congress does act, a trigger law sets a course that would fully remove a state recovery in your state. That means fewer barriers to HCBS and a simpler and more humane Medicaid program. All right, next slide and next policy. States can prevent collections against the smallest estates by setting a cost-effectiveness threshold. Gelila just referenced this. Several states have already done so. For example, North Carolina does not collect against any estate valued at less than $50,000. In Georgia and Illinois and a few other states, it’s $25,000.
In fact, a whole bunch of states actually have these cost-effectiveness thresholds, but they’re really old and they’re at laughably low amounts of money in the hundreds of dollars. So check to figure out if your state has such a thing. We wrote a model policy that uses $25,000 because it’s the most common one among the states that have made some recent updates, but states have flexibility here. I’m actually unaware of CMS ever disapproving any specific threshold. Now, there are benefits and limits to this type of policy.
First, this results in a lot fewer collections happening. If you harken back to Gelila’s summary of the assets owned by people on Medicaid, you saw a very significant fraction of people actually don’t have any positive assets at all, and many have just really, really small amounts. So the average estate recovery when it happens is less than $10,000. A third of all recoveries are less than $1,000. So any level of cost-effectiveness threshold means significantly fewer cases, which means less angst for families and less administrative burden for states even when we’re focusing on relatively small amounts.
Second, what’s nice about a cost-effectiveness threshold is that it doesn’t really require families to act. Gelila just talked about the hardship waivers and other protections that do exist, but very few people use them in part because they need to know that they have protections and then they have to figure out how to file a hardship exemption. That’s not true with the cost-effectiveness threshold, which kind of puts the onus more on the state to simply not pursue a recovery action at all when the estate is valued under a certain level.
Third, the return on investment for all Medicaid state recovery is really limited, but this policy actually improves that return on investment because it focuses the state’s recovery efforts away from the tiniest value of states and towards those that are, they’re not big, but they’re less tiny than the ones on which states are spending a lot of administrative time right now. And that has some political salience in different states that I think is important.
Nonetheless, there are benefits to this policy, but there are limitations too. A cost-effectiveness threshold probably is a really limited value in terms of the extent to which the existence of a state recovery just dissuades people in need from signing up for Medicaid at all. And it still means that a lot of family homes will still get caught up in these collection processes. I should also note too, these things all overlap. In some states with certain probate rules, the impact of a cost-effectiveness threshold is kind of more attenuated than it is in other states. Nevertheless, in many states, raising a cost-effectiveness threshold is a really practical option with real benefits, even if it’s just kind of an incremental one. All right, next up. And here’s my last one. The final model policy here is for the state to collect only on the minimum required by federal law.
Again, harken back to things that Gelila talked about earlier. Medicaid estate recovery is only required in relation to costs for long-term care and certain related services. But in 37 states, they choose to pursue collections for the cost of other services too. For example, some states apply a state recovery to the adult coverage group that we typically call it the Medicaid expansion group for those of you in states where that is relevant. And in many circumstances, this is so crazy, but in some those circumstances, that means the capitation rate paid to a managed care plan is essentially claimed against the value of your property, even if you never used any Medicaid services at all. So this model policy would protect that egregious scenario from happening for people in that adult expansion eligibility group. This model policy would also mean opting out of the collections process under that separate legal authority that applies to the value of ABLE accounts. That’s something 21 states have already done, but many more have the opportunity to do so soon. All right, next slide.
That’s three good policy options. They’re not mutually exclusive for one other. There are plenty of other options too, and the best option in one state might not be the best option in another state. The most important takeaway here is that states have flexibility and most states still have lots of opportunities to go further, at least to limit the extent to which the government comes to seize someone’s property just for using Medicaid. Of course, many of you, nearly all of you, are in a state that’s facing a tough budget year coming up. And so I want to end with just one minute on the financial stakes here. First, to put this in perspective, the totality of Medicaid state recoveries offsets about one sixth of 1% of Medicaid costs.
In raw dollar terms, it’s like real money to you and me, but it’s not even a rounding error in Medicaid writ large. Even that one sixth of 1% overstates the case, and that’s because every state experiences administrative costs related to this process, and every state returns at least half of their recoveries to the federal government. The bar chart on the right here illustrates how this plays out in Ohio. First, 30% of all of Ohio’s recoveries just go to funding the lawyers and other legal support for the government to pursue this process. And then 64% of what’s left just goes back to the federal government based on Ohio’s FMAP rate. So that means Ohio nets less than 25 cents for every dollar it has otherwise sucked out of the Ohio economy. That’s a bad deal for Ohio. It’s a bad deal for a lot of other states, especially states that have high FMAP rates, which correlate to high poverty rates in the state.
I raise this because it might be a really useful point of emphasis for people who want to work with policymakers and want to message this appropriately. And for more on messaging, I’m going to turn it back to my friends at Justice in Aging.
Gelila Selassie: Thank you so much, Tim. So before we get to questions, we’re just going to touch base on, as Tim mentioned, some messaging strategies and tips. First, with respect to communicating the harm of estate recovery, there’s a lot of challenges and difficulty with how to explain it. First, as you mentioned, it only exists in this one specific aspect of Medicaid. It’s not across the board in every state across all Medicaid programs. It doesn’t exist in any other federal program. And so there’s no frame of reference for people to really grasp what’s going on.
I’ve heard it explained one time, like you spend down all your money to get this type of health insurance, Medicaid, but then they send you the bill later on. It does not make sense to a lot of people, again, because you’re getting on a program that’s supposed to cover this for you. And so, that makes that really challenging. And information on this is really complicated, state specific. And as you said, states are not doing a good enough job making sure people are aware about estate recovery.
And I keep saying estate recovery, but that’s a terrible word. Estate suggests something of grandeur, right? Some Downton Abbey-esque castle type of thing, not what is very often a couple bedroom house and a little couple hundred dollars in a bank account. That’s usually what we’re talking about here. Very, very simple assets and property. And so estate is the technical terminology and that’s rooted in probate law and estate law, but it’s not what the everyday layman’s term view of what an estate is really inconsistent with how it’s used in the law. And then policymakers often do not understand the harm of recovering a home after that individual dies. They don’t realize that there’s still harm being done even if the individual got to live in the home or benefit from the home.
There’s this big disconnect for whatever reason that a family member isn’t going to be affected by their parent or grandparent not having this home to pass on to. And so it’s really baffling, but it’s something to make it clear that this is significant enough, losing the home is significant enough where people are going to go without care. And Medicaid, as we said, is often the only source of care people have long-term, but they’re willing to go without it if it means their family members aren’t going to have access to the house. And then a lot of misconceptions on the availability and needs on hardship waivers, deferrals, and as Tim noted, how little the state actually recovers. This isn’t a moneymaker at all for states. And the process for administrating, administering it is massive, it’s expensive, and it’s done at a huge, huge disadvantage to very vulnerable, low income individuals.
And so in terms of some messaging tips, we suggest first and foremost, using plain language as often as possible. I’m bad at this. I’ve used a state a thousand times, but things like home, property, savings, a car, very basic terminology or plain terminology is really helpful here. And then same thing with instead of recovery, thinking of seizing their property or collecting their property is a little bit easier for people to grasp. And then looking at the scope of harm, making it clear that, as I mentioned, Medicaid is often the only source of LTSS. The choice for most people is going to be a state recovery or no care. So there’s not really a great choice that states are giving people. And as you mentioned, it’s a massive harm to these very indigent populations for very little money for the state. That’s probably one of the biggest cruelties about this policy.
And then as you mentioned, focusing on the primary home. We know that a lot of people, home-ownership has been a big tool for people of working class, middle class, maybe even lower classes in areas of the country where home-ownership has historically been a little bit cheaper. We know that houses are getting more expensive, but for the most part, that is all people have, right? They may have bought this home 40, 50, 60 years ago, saved up for it, worked to pay it off, worked to keep it in good shape and pay the taxes on it, only for a state to seize it after they die because they needed care. That’s effectively what this is. And so focusing on this primary home that people put their entire lives into also helps bring home how cruel the policy is and noting now how much it puts families at risk of intergenerational poverty and homelessness.
We also strongly recommend sharing stories and examples. The ones that Hannah brought up at the beginning are only a couple, but the impact people have, the data points, the policy, that’s all very good, but it really should be coupled with individual stories because it’s very hard to not recognize situations like Imani’s and Rebecca’s and just wonder why are we putting people in this situation for something as essential as care? And we also have a link to our resource communicating the harm of Medicaid Estate Recovery that goes to this and a little bit more in more detail.
Before we get to questions, we have a poll from the audience. Which of these strategies are you interested in working on in your state? You can choose one or multiple options that apply. The first is exempting small recoveries to promote cost-effectiveness. The second is limit recovery to federal minimums. Third is added trigger statute for federal changes. And the last is to improve notice and education on recovery and hardship waivers. So we’ll give folks a second there. All right. And I don’t know if we can pull up the results. Perfect.
So it looks pretty fairly distributed. Lots of people are interested in notice, education, recovery and hardship waivers. And then about 44, 42% are interested in limiting recovery to federal minimums and exempting small recoveries to promote cost-effectiveness. And about 26% of you are interested in adding trigger statutes for future federal changes. So that helps us out a lot as we try to develop these policies to help you out across both of our organizations.
Hannah Diamond: Thank you so much, Gelila. So you’ll see the slide right now. This is an opportunity to join our network at Justice in Aging. We encourage you to become part of the family, if you’re not already. So you can do so by going to justiceandaging.org and clicking sign up, or you can send an email to info@justiceanaging.org. Next slide.
So here you have all of our contact information. We really encourage you to be in touch. We’re going to start off with some questions for both Gelila and Tim. So I think Gelila, this is for you. There are some questions about recovery beyond the federal minimum, so some confusion about recovery that is more expansive or beyond the federal requirements of an individual age 55 and older and specifically long-term services and supports. Can you remind us of the federal minimums and also the fact that states can be more expansive in their recovery?
Gelila Selassie: Yeah, absolutely. So the federal requirement is sort of in the terms of who it applies to, the minimum is people 55 plus who utilize long-term services and supports or anybody of any age who is permanently institutionalized. So those are the federal minimums for the people that recovery applies to. And then in terms of the scope, the property that would normally go through probate is the federal minimum. And then I forgot what the last one was. Oh, the services that are subject to recovery. At a federal minimum, that would be the long-term services, LTSS costs for HCBS or nursing home care or anything like any prescription drugs or hospital services that were utilized within that scope of LTSS, within the LTSS service universe.
States can go beyond that in terms of the who, as Tim mentioned, can be expanded to other Medicaid populations, people who are on the age blind disabled programs, the expansion population, for example, younger people under 55 who might utilize these services, and then it can go beyond probated property. So things like tenancies and life estates that are typically not included in a probate process. And then just other services as well, like just broader general healthcare services, office clinics. Pretty much the only barrier is on those Medicare savings program payments is the only thing that states cannot expand on when it comes to the services that they’re recovering for.
Hannah Diamond: Thank you so much, Gelila. And can you also clarify when a state recovery goes into effect? Does it happen when the person is alive or when the person passes away? There were a few questions about that.
Gelila Selassie: Yeah, good question. So a state recovery will take effect once the Medicaid user passes away. That’s how it’s done. And as part of the estate wills probate process is the closest sort of way to consider it, but being done by the state and exclusively for recovering the services. People will know about it, should be knowing about it in advance, may have to have the bottom of their Medicaid application might say something, they may have to initial there, something to that effect, but the lien isn’t actually placed until after they pass away.
Hannah Diamond: Thank you, Gelila. Tim, this question is for you. You talked about the limited return that states are receiving regarding pursuing a state recovery and just how administratively expensive it is and how it’s really a drop in a greater ocean regarding the costs. So why are states pursuing this if they’re not making money is the question. Why are they doing this?
Tim Engelhardt: It is a good question, and I think it has multiple answers. As everything in Medicaid it has answers that vary by state. I think a significant part of it is inertia. There’s no harder job in America than being a Medicaid director, especially right now. The average tenure as a Medicaid director is a couple of years, and so I respect them endlessly. I don’t know how many of them could really go deep on how this process works in their own state and certainly not really fully process all the opportunities to minimize its harms. So I do think a little bit of it is inertia, and that’s why I am, despite tough budget times and despite other priorities, I really am bullish that people on this webinar and elsewhere, simply by shining a light on the opportunities here, I think there are meaningful opportunities in state legislatures and with state executive branches, even with all of the other headwinds. So that’s number one.
Number two, we tend to fall down on the exceptional cases. Somewhere out there, there’s a tech bro whose mom was on Medicaid, and is it important that that individual inherit what’s left of her property? Maybe not. Those are just such exceptional cases though, and they belie the reality of this, which is it’s really become this two-tier system where people of means are paying lawyers to use a whole suite of other asset protection techniques. And it’s really the people who have the least who are being affected by this process. So I think helping policymakers better understand that the exceptional kind of cases aren’t really what’s functionally happening out there, I think is an important part of this. And then finally, it’s a reason why some of these incremental policies are useful to consider in this case, because I think chipping away at the extent of this, even through incremental means, is a step towards getting to a place where we finally can simplify and take this out of the equation altogether.
Hannah Diamond: Thank you, Tim. And the fact that it’s currently required of states, right? It’s a federal requirement that they pursue.
Tim Engelhardt: Yeah. So there’s only so much latitude here, and that’s why some of these are complicated arcane processes because currently the federal law requires some of this to happen.
Hannah Diamond: And actually that’s a good segue for this next question. There were quite a few questions about what’s happening at the federal level to try to ease or mitigate or prohibit a state recovery. Can either of you speak to that? I know Tim, you had some mention of that within your slides, some federal policy solutions. Gelila, other things to add? So this is for both of you.
Tim Engelhardt: We’ve written a few policies ourselves you can find on our website, but Congresswoman Schakowsky has sponsored legislation in multiple congresses to eliminate Medicaid state recovery altogether. There is a large long-term care reform bill called the HCBS Access Act that also has a provision in it that would eliminate Medicaid estate recovery. And just a few days ago in a process led by lots of Senate Democrats, a request for information came out about a whole suite of potential long-term care reforms, including specific questions about how the Congress ought to think about these things. So there is a little bit of congressional attention and also an opportunity for people to weigh in and inform that process. So I hope people will think of this issue as a meaningful component in much broader and more comprehensive long-term care reforms in this country.
Hannah Diamond: Thank you, Tim. Gelila, there’s a little bit of confusion and some back and forth about deferrals. So can you clarify for us about how that works, specifically the federal requirements that if one of the deferrals is present, specifically a surviving spouse or a minor under the age of 21 or a disabled child or individual that the state cannot recover? Can you go over those deferrals again?
Gelila Selassie: Yeah, sure. So the deferral is pretty much just sort of pressing pause on actually collecting the money that the state can under a state recovery. So it’s not saying that we can never collect on the home, we can never collect on any of the other assets, but the idea is as long as the surviving spouse is alive or the disabled child in the house or the minor child, then we are going to press pause until that family relative under the deferral rules passes away and then we can collect the property.
Waivers, on the other hand, are saying that we’re just not going to collect at all because of this hardship or any other policy the state has where it’s eliminated. The fee or the bill is basically completely waived either wholly or a state can decide to only go after a certain amount of the estate and something that maybe the family could do a payment plan for, or if it’s a small amount of money that there’s maybe a car part of the estate that isn’t essential to them, they could sell that to pay off part of that amount of that partial waiver. So that’s effectively the difference, pausing versus completely eliminating the recovery.
Hannah Diamond: And I think for our final question, Gelila, again, this is for you because you just mentioned hardship waivers. There was a question around what we see surrounding the timing that a family member has to request a hardship waiver. How long is that on average? Is it a long amount of time, a short amount of time? What do we see?
Gelila Selassie: Yeah, that’s a good question. It’s typically… I don’t want to say typically because again, nothing’s typical in Medicaid, but in the few states that we’ve seen, it can be as little as 30 days as when the state has filed or submitted for the lien within probate. Worst case is when the individual or the state put this lien on the property and the family member doesn’t even know about it right away for one reason or another, and then that’s when the clock might start for say a 30-day notice period. So it’s not necessarily based on when the individual gets the notice saying, “Oh, we’re putting a lien on it and you have 30 days to let us know.” It’s very often just based on the date. And as I said, it can be as little as 30 days, possibly even less than that, and very rarely, not much longer.
Hannah Diamond: Thank you. Okay, we are nearing the end of our webinar. I want to thank you all for joining us today. I want to thank our presenters, Gelila Selassie and Tim Engelhardt. As a reminder, any questions that we didn’t have a chance to answer will be followed up on via email, and feel free to reach out to us with any additional questions. Again, you’re going to get the slides, you’re going to get the recording. And don’t forget to complete the post-webinar survey. Your feedback on presentations like this one is extremely important to us. Thank you so much and have a wonderful rest of your day.
