If you enter the nursing home for long term care, you will likely need Medicaid to pay the bill. After you die Medicaid will want every dollar, dime, nickel and penny paid back. Blame Medicaid Estate Recovery. It doesn’t matter if you served our country, paid all your taxes and committed no crime – unless getting old is a crime – you will lose your home and everything you own. It’s the law and it’s called Medicaid estate recovery, but you can do something to change it. There is a bill in Congress to repeal the government grab. It’s called “Stop Unfair Medicaid Recoveries Act of 2022″ enrolled as H.R.6698.
Let’s first understand that Medicaid is a medical insurance program. It does not put any money into a recipient’s pocket. Secondly, Medicaid estate recovery only refers to benefits received by those aged 55 and up. Third, Medicaid estate recovery is not needed for the program to function. On the average states collect, after administrative expenses, only .55% of their budget. (See https://www.macpac.gov/publication/march-2021-report-to-congress-on-medicaid-and-chip/ )
How could you lose your home, and everything you own, to the government? For the sake of privacy let’s use a story that is typical of so many working families. No confidential personal details are revealed. Jack Stone died this year, he was 82 years old. Jack was a hard-working average guy. He served his country in Vietnam. He married his high school sweetheart Jane and they raised three children in their comfortable suburban home in Redford, Michigan. He began working at age 17 and except for his service in Vietnam, he worked and paid taxes until he retired at age 65. Seven years ago he was diagnosed with Alzheimer’s Disease. After taking care of Jack at home Jane, of frail health herself, could no longer handle him and had to place Jack in a nursing home, where three years later he died. Just weeks after his funeral Jane was shocked to learn that the state of Michigan wanted pay back in the amount of $244,000 in “Medicaid estate recovery.” They would allow her to live in their home until she died. If she tried to sell it they would collect out of the proceeds.
Why? Do you know of any other government program that wants money back? You don’t pay back for schools, roads, police or fire protection. You don’t have to pay back Medicare either. What’s going on?
Medicaid recovery has been part of the program since its inception in 1965. It was optional for the states. Most did not want it. The basic political idea was that people should not live off welfare and buy things like houses, or maybe “Cadillacs.” But things changed. As time went on families could no longer care for grandparents in their home. A two income household became a necessity. And in 1988 Congress changed the law to allow an at home spouse to retain a home and some savings for her/his needs.
Then the law changed again. In 1993 Congress then required all states to have Medicaid payback. The reason? The insurance industry wanted people to live “responsibly” and buy long term care insurance. ( See the US News article referenced below.) Have you seen the Ads by lawyers who have to fight the insurance industry for their injured clients?
There is a cruel irony in the “live responsibly” admonition. If people drink alcohol to excess and ruin their liver, Medicare will pay for treatment. If a person ignores diabetes and ultimately has to have amputations, Medicare will pay. No payback required by Medicare. But seniors who develop Alzheimer’s through no lifestyle fault, may lose everything they own because they did not “live responsibly.”
Aside from being fundamentally wrong, there is another reason why the law needs to change again. This time it is the world that changed. We will cover later the reasons why the estate tax on the rich was repealed. But in short, supporters argued that if the estates of millionaire business owners had to pay the inheritance tax, competition would be hurt since the family would have to sell or mortgage the business. Now America finds it must compete with China, India and southeast Asian countries for jobs and business. We are in a boat as was England 100 years ago when it was declining in world power. We need a 21st Century workforce that is highly trained, educated and skilled. Our best asset is our people who do the work. Just as millionaire businesses need money, families need money to get the education to be competitive. They need the equity of their homes to be able to take time to get that education.
You can help stop this unjust and wrong law. Call your Congressional Representatives and ask them to support H.R.6698 – Stop Unfair Medicaid Recoveries Act of 2022
If you want to read more about the effect of this unfair and simply wrong law read this article from the US News and World report.
Debt After Death: The Painful Blow of Medicaid Estate Recovery