Medicaid is the state medical insurance program serving low income residents. It is funded from taxpayer money, gathered through state and federal
taxes—not by payment of an insurance premium. (Not to be confused
with Medicare, the federal medical insurance program for those over age
65.) Each state administers its own
Medicaid program and, as a result, the rules and regulations for the Medicaid program will
be different in each state.
The Affordable Care Act (a/k/a Obamacare) significantly expanded the Medicaid
program for each participating state. Although not every state accepted
the offer of increased federal payments to expand the state Medicaid program,
for those states who did expand their Medicaid program under the ACA,
such as Colorado, 11 million more people became eligible to be covered
by Medicaid in various states. The expansion of Medicaid under the ACA
allowed many more individuals to participate in Medicaid because the definitions
of “low income” were changed. These new beneficiaries may
be employed, own their homes and would not ordinarily consider themselves
to be “poor.”
Since Medicaid is funded through taxpayer funds, Medicaid is not self-funding
as is a typical private health insurance plan.
In order to reimburse the taxpayers for the medical bills paid by Medicaid,
the Medicaid programs in each state require Medicaid beneficiaries to
pay back to Medicaid some medical expenses in some circumstances.
When Do I Have to Pay Back Medicaid?
For instance, if a Medicaid beneficiary is injured in a
car accident, Medicaid will pay for the care and treatment of those injuries. However,
if the beneficiary obtains an insurance settlement that pays compensation
for those injuries, state law requires that the beneficiary pay back to
Medicaid the amount of medical expenses paid for those auto injuries. If the beneficiary has a lawyer, state law requires that the lawyer notify
Medicaid as soon as he or she is involved in the injury claim and to notify
Medicaid as soon as a settlement is reached so that Medicaid is paid back
from the settlement. If the beneficiary does not have a lawyer, the beneficiary
must notify Medicaid either directly, or through the insurance company
that will be paying the claim, that a claim is being made and that Medicaid
will be paid back those medical bills paid on account of the injury.
Do I Have to Payback Medicaid Out of My Deceased Relative's Estate?
For more than 20 years,
federal law has also permitted states to recover all Medicaid costs in
cases where beneficiaries at least 55 years old when they pass away under the “estate recovery” program. Medicaid costs often
include the high expenses of nursing home care or other long term care
that may accrue for years before a beneficiary dies. Under the old eligibility
rules, this usually meant Medicaid recovered little because Medicaid beneficiaries
were only eligible for the program if they were very poor and those beneficiaries
rarely left any assets upon their death. Under the expanded Medicaid/ACA
many families are surprised to learn that they owe Medicaid a significant
amount of money on the death of their elderly relative from the assets left to them by their deceased relative. Medicaid can
seize savings accounts, houses, trusts and retirement funds to reimburse
the program for medical expenses paid by the state Medicaid program. Many
such families have had sell to sell the deceased relative's home or
other assets in order to reimburse the state for the Medicaid expenses
paid during the deceased’s lifetime.
Medicaid rules in most states
do not allow the state to seize assets during a surviving spouse's
lifetime or when surviving children are younger than 21 or permanently disabled. Additionally, survivors in most states can seek “hardship”
exemptions to deny the state the assets of the deceased relative. Some
states, including Colorado, have scaled back what Medicaid costs they
will attempt to recover from estates—but most states have not.
In the meantime, some are so fearful of the seizure of their assets on
their death that they will decline to participate in Medicaid if that
is their only choice under the ACA—or they will put off medically
necessary, but expensive, procedures until they are old enough to qualify
for Medicare, which does not have the repayment rules. Some say that
this new twist on the Medicaid program disproportionately affects moderately
low income people (who likely still own a home or have some modest savings or retirement
accounts), as no such seizure is mandated for others who are covered through
the ACA. Discussion is underway over proposed federal regulations that
would limit what the participating states can pursue from a deceased Medicaid
beneficiary’s estate—but there is no word yet on when those
new regulations might go into effect.
If you have more questions about Medicaid and what you might be required
to pay back,
call our firm today!