Medicaid recipients may have their estates billed down the road – NJ.com

Opponents have nicknamed one provision of Medicaid the “Obamacare death debt.”

They are referring to the Medicaid Estate Recovery Program. And while it does exist, it predates Obamacare by two decades.

The Medicaid Estate Recover Program is how the federal government is repaid for money it spent on a lengthy stay in the nursing home. If someone was on Medicaid, the government can, in some instances, put a lien on his estate after his death.

That’s been the rule since 1993, when Washington told the states they had to try to recoup what Medicaid spent on nursing home care and related expenses for Medicaid recipients 55 and older.

Here’s where Obamacare comes in: The Affordable Care Act encourages states to expand their Medicaid rolls so single people and childless couples can now qualify if poor enough.

That means thousands of newcomers to Medicaid may not realize that ultimately they may have to repay the piper.

“For the uninformed, it could be a problem,” said John Callinan, a Middletown certified elder law attorney. “It can be a trap for the unwary.”

The prospect of seeing her estate docked for her medical bills makes one 60-year-old Ocean County woman reluctant to enroll in Medicaid, even though she and her husband both qualify. The retired couple lives on modest retirement 401(K) savings.
She’s debating whether she should go without insurance entirely — and face a fine — or enroll in Medicaid and leave her small estate vulnerable years down the road.

“It’s a concern, because it does leave the door open that they can come after you,” said Linda E., who didn’t want her full name used because she said she didn’t want to attract the attention of the government. “It could open up a big can of worms.”

The asset that usually prompts the most attention is a Medicaid recipient’s house, he noted. It isn’t counted as an asset when a person applies for Medicaid. In other words, if a homeowner has little income, he can qualify for Medicaid. After the homeowner dies, the government will typically file a lien on his house.

However, there are exceptions. The government will not seek money from the sale of the house if the homeowner’s spouse still lives there, or if there are children under the age of 21.

But if there is no surviving spouse or minor children, the heirs may discover the lien when they sell the house. Sometimes, said Callinan, that can be years later. “If the kids go to sell it 20 years from now, that lien will pop up,” he said.

People can sign up for NJ FamilyCare, New Jersey’s Medicaid program, throughout the year. However, the state saw a surge of new applicants as people seeking health insurance through the Obamacare website learned their income was so low they qualified for Medicaid.

There is no asset test for Medicaid; only income and available cash resources determine eligibility, according to Nicole Brossoie, spokeswoman for the state Department of Human Services.

By the end of March, NJ FamilyCare had nearly 1.4 million residents enrolled. Roughly half of them are children. Just over 84,000 are categorized as “aged.”

In New Jersey, liens were filed against 325 estates in 2012, and 343 estates last year, according to Brossoie. Medicaid doesn’t seek repayment while the recipient is still alive, she said.

The state doesn’t get first dibs on estate funds, though, said Callinan. Ahead of it in line for payment are funeral expenses, medical bills from the final illness and the executor’s administrative fee, he said.

The prospect of repaying Medicaid after one’s death wasn’t a big deal for most of the people who enrolled in Obamacare over the last few months, said Leah D. Dade, executive director of the Paterson Alliance, a collection of community groups.

The reason? Most were too poor to have any assets to worry about.

“They have so little,” she said. “They’re not owning houses.”