By: David Ostrowsky

It is the most nightmarish version of a wolf at the door.

Imagine that you have recently lost a loved one, are still in the midst of grieving, feeling sleep deprived, dealing with a bevy of uncomfortable logistical issues, and then told . . . that you may have to forfeit your house.

Such a dire predicament befalls tens of thousands of Americans whose recently deceased relatives were Medicaid beneficiaries who received long-term care services (i.e., nursing home care or in-home healthcare) and never reimbursed their respective state of residence. (Although it should be noted that many who receive such care don’t realize Medicaid is expected to be reimbursed after they pass away.)  By law, states are required to try to pursue reimbursement by obtaining the assets -- the most expensive of which is often one’s house – of the heirs. Subsequently, said relatives can be compelled to sell their house, to which they certainly have a strong sentimental attachment, or risk government authorities seizing the property. Ultimately, more often than not, they are left in dire straits.

This awkward and unforgivingly cruel process stems from a 1993 federal law that mandates every state recover funds from the assets of the recently deceased, who, during their final years, tapped into Medicaid for expenses. When someone is alive, they can still qualify for Medicaid based on their liquid assets -- irrespective of their home’s value. However, the home does apply to the estate recovery process for late Medicaid recipients who were over 55 when enrolled.

While the federal government requires every single state to enact Medicaid estate recovery programs to recoup funds from Medicaid expenditures, the particulars of the programs are at the individual states’ discretion. For example, there are states that place a lien on a home while others refuse to. Some states’ Medicaid offices are very aggressive in trying to recover funds from literally all medical costs (e.g., doctor visits and prescriptions) while others just focus on getting reimbursed for long-term care. According to a recent Associated Press report, some of the more lenient states include Alaska and Arizona, which have gone after merely dozens of properties over the past several years while other states such as New York and Ohio have pursued thousands of homes. In other words, there are states that would rather not pursue recovery but are required by federal law to do so.

Naturally, this situation, which has been in place for decades, hits low-income Americans the hardest while perpetuating the vicious cycle of stark wealth disparities and intergenerational poverty.

But now, it seems at least possible that there may be an end in sight.  

Last month, U.S. Representative Jan Schakowsky (Illinois, 9th congressional district), Co-Founder and Co-Chair of the House Democratic Task Force on Aging and Families, reintroduced the Stop Unfair Medicaid Recoveries Act of 2024 that aims to repeal the federal legislation mandating state Medicaid programs pursue the deceased’s estates for reimbursement of Medicaid long-term care services. Citing pragmatic reasons – naysayers contend that the program collects only 1% of the more than $150 billion Medicaid spends yearly on long-term care – and appealing to her colleagues’ emotions, Schakowsky delivered an impassioned plea in the March 6th official press release:

“Imagine losing a loved one and putting them to rest, only to have Medicaid come knocking on your door demanding you now pay for the long-term care your departed relative received – an amount that has reached, in some cases, hundreds of thousands of dollars. Sadly, this is the reality for thousands of American families each year due to the federally mandated Medicaid Estate Recovery program. Often the only means for Medicaid to reclaim this money is by seizing the family home causing incredible emotional and financial suffering to the beneficiary’s family. . . . In many cases, Medicaid estate recovery keeps families in poverty and forces seniors and disabled individuals to forego care. Further, Medicaid estate recovery disproportionately harms low-income, blue-collar families and communities of color.” 

Only time will tell whether Schakowsky’s proposed legislation gains any traction in Congress where it will surely face strong headwinds. But perhaps irrespective of the proposal’s fate, the larger point – and one that often goes unsaid – is that so many Americans in the final stages of life resort to Medicaid in the first place because they are unable to afford what has become prohibitively expensive private health insurance.