Introduction to Medicaid Estate Recovery

Medicaid, as opposed to Medicare, is a health insurance program, jointly funded by the state and federal governments that pays for health care for America’s poor. See Medicaid Act (Title XIX of the Social Security Act), 42 U.S.C. § 1396 et seq. Not everyone is eligible for medical assistance; only those persons who fall within a defined “class of assistance” (COA) receive Medicaid. For certain COAs, primarily nursing home care and related long-term care, medical assistance is treated as a loan. Following the death of a Medicaid recipient on such a COA, Medicaid seeks reimbursement of funds it paid. The collection process is called estate recovery.

Since 1993, federal law has required that States pursue Medicaid estate recovery. In mandating estate recovery, Congress sought a way “to stymie the growth in state Medicaid expenditures without depriving eligible recipients of much-needed care.” West Virginia v. United States HHS 132 F.Supp.2d 437, 440 (S.D. WV 2001). The general public, however, is typically confused and incensed when the State makes an estate recovery claim. Recently, a pro se Plaintiff, proceeding in forma pauperis, described estate recovery as “nothing more than a vast, unlawful conspiracy to deprive the Plaintiff, an American who is Black, of his property, his dignity and his constitutional rights, simply because they could.” Drake v. Miller, 2009 U.S. Dist. LEXIS 45052 (W. D. KY May 29, 2009). Adding to the confusion, it has become commonplace for States to overreach when pursuing estate recovery, making claims that go beyond the permissible limits of federal law.

Courts usually cite collections, replenishing the Medicaid coffers, as the policy reason behind mandatory Medicaid estate recovery. Although myriad policy considerations appear to be behind its enactment, collections could not, logically, be the primary motivating factor. Most estimates place collections at less than 1% of expenditures. Some writers suggest that one legislative purpose was to encourage individuals to purchase long-term care insurance. “The long-term care insurance industry was one of the major proponents of OBRA 93’s estate recovery mandate. This group argued that the threat of having a Medicaid recipient’s estate consumed by Medicaid debts would provide a strong incentive for elders and their families to purchase long-term care insurance before the need for long-term care arises.” J. Zieger, The State Giveth and the State Taketh Away: In Pursuit of a Practical Approach to Medicaid Estate Recovery, 5 Elder L.J. 359, 375 (1997); see also I. Wiesner, ORBA 93 and Medicaid: Asset Transfers, Trust Availability, and Estate Recovery Statutory Analysis in Context, 19 Nova L. Rev. 679, 688-691 (1995). If true, any such policy is suspect since elders, surviving on limited means, often cannot afford long-term care insurance premiums.

One might ask, if estate recovery is so distasteful, why not reject Medicaid. Some people do exactly that. The Medicaid Act does not “forcibly expose citizens to estate recovery. Persons subject to estate recovery receive notice of the estate recovery requirement before they decide whether to accept or reject Medicaid benefits.” California Advocates for Nursing Home Reform v. Bonta, 106 Cal. App. 4th 498, 511 (Cal. App. 1st 2003). Even so, Medicaid applicants often feel little choice when the question is to accept the potential of estate recovery and receive necessary care, or reject estate recovery and die.

Confusion regarding the Medicaid program is understandable. “The Medicaid Act is an enormously complicated program. The system is a web; a tug at one strand pulls on every other. [Cit.] Given this complexity, there are untold ways in which a state plan might fail to comply with the Act and the governing regulations.” West Virginia v. United States HHS, 289 F.3d 281, 294 (4th Cir. 2002). The program has been called Byzantine. At least one judge has stated that the program is so complex that a draftsman who has gotten himself into a position such as this should make a fresh start. Id.

Advocates fear that potential Medicaid recipients will decline necessary care out of fear that estate recovery would deplete their estate. They report that estate recovery tends to reach individuals of very modest means and has a chilling effect on low income people seeking benefits to which they are entitled. R. Rein, Misinformation and Self-Deception in Recent Long-Term Care Policy Trends, 12 J.L. & Politics 195, 225 (1996). They argue this “chill” will ultimately increase Medicaid costs by deterring low-income seniors from seeking care that might prevent more serious illness later on. Id.

“No one chooses to be afflicted with illness or disabilities requiring long-term care. Many elders who face the need for long-term care, and their loved ones, suffer an involuntary triple catastrophe. First, there is the emotional pain of contemplating one’s own or one’s loved one’s long-term disability. Next comes the shock of discovering the enormity of long-term care costs and contemplating the possibility of having all or most of what the family has struggled for a lifetime to acquire and save wiped out within a few months or years of the onset of the disability. The third, and not necessarily final, shock occurs when individuals and their families lean that some of their fellow Americans will view their efforts to preserve some financial cushion for themselves and their loved ones against financial ruin (and the vulnerability and helplessness that come with it) as manifestations of selfishness, greed, and downright fraud.” R. Rein, supra, at 206.

This page and the pages that follow provide a brief overview of Georgia’s Medicaid Estate Recovery Program. It is not meant as an exhaustive survey of the law. Further, the law in Georgia continues to develop since implementation of the program as of May 3, 2006. We will update this as possible, but some updates are more easily found by searching this website or by using the “estate recovery” when reviewing other Blog articles.