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Federal law requires state Medicaid programs to seize the assets of people who have received certain Medicaid benefits after they pass away, even if the state would prefer not to seek such recovery. In many cases, this means that after an older adult or person with disability receiving Medicaid long-term care at home or in a nursing facility dies, the family is forced to sell an asset such as the family home that otherwise would have been passed down. The burden of Medicaid recovery falls disproportionately on economically oppressed families and communities of color and prevents families from building wealth through home ownership.

The minimal revenue generated by recovery is outweighed by the burdens it places on low-income families.[1] Congress should end Medicaid estate recovery so that low-income families can access the health care they need without sacrificing their homes and the stability of their families.

Medicaid Recovery Explained

Medicaid funds health and long-term care for older adults and people with disabilities who otherwise cannot afford it. In most cases, an older adult becomes eligible only after spending their life savings down to under $2,000. A home generally is exempt and not counted in determining eligibility.

Medicaid is the sole health care program that seeks to claw back health care expenses after the person who receives certain Medicaid benefits dies. Specifically, federal Medicaid law requires repayment from the person’s estate if the person was at least 55 years old when receiving Medicaid services. The state must take money from the estate to pay itself back for nursing facility care and home and community-based services, and can recover certain other specified services as well.[2] The person’s home is no longer exempt once they pass away and is generally the main source of estate recovery.

Recovery Keeps Families in Poverty, Particularly Families of Color and People with Serious Illness

The burden of losing the family home falls especially hard on families of color living in multigenerational homes. Due to historic and ongoing racist housing and economic policies, people of color often do not have access to familial wealth in the form of family members willing to co-sign a loan or assist with a down payment, and may also have limited access to credit and mortgages.[3]

The burden of recovery also falls inequitably on families who experience unpredictable medical events, such as a family member who develops Alzheimer’s Disease and needs months or years of nursing home care or home and community-based services. This unpredictability is exacerbated by inequities in our health care system that particularly harm lower-income and older adults of color. All these factors make estate claim collections unfair and societally counterproductive.

Recovery Reduces Available Housing

Seizing the family home also works against federal, state, and local efforts to create more affordable housing. Federal programs alone spend billions annually to address the dearth of affordable housing for low- and moderate-income persons.[4] It does not make sense to add to the housing affordability crisis by taking housing away from low-income families due to a family member’s health care needs and to place them at risk of housing precarity and homelessness as a result.

Financial Benefit to States is Minimal

The primary rationale for estate recovery is financial – that recovered funds will support state Medicaid programs. This rationale is contradicted by data from the Medicaid and CHIP Payment and Access Commission (MACPAC), which shows that states recovered less than 1% of dollars spent on Medicaid long-term care services.[5] In each of the five fiscal years 2015 through 2019, states recovered only 0.53% to 0.62% of the Medicaid fee-for-service spending on long-term services and supports.[6] These data are consistent with other examinations of estate recovery finances.[7]

Example: Recovery in Kansas Aimed at Poor Families

Estate recovery has a relatively small financial impact on states, but can be devastating to a person’s surviving family. The recent report from the HHS Office of the Inspector General, focused on estate recovery in Kansas, demonstrates this impact.[8] For a sample of 30 Medicaid recipients subject to recovery, the state incurred health and long-term care expenses of $6,055,884, but recovered only $162,298, which is only 2.7% of incurred expenses. Further, Kansas recovered these expenses almost exclusively by forcing the sale of homes of very modest value and against small estates. None of the estates was worth more than $100,000, and 25 of the 30 estates were valued at less than $11,000. The median value was only $1,532.[9]

Conclusion

Federal law should be amended to eliminate Medicaid estate recovery. Proposals such as the Stop Unfair Medicaid Recoveries Act would repeal the federal mandate that requires state Medicaid programs to go after family assets for repayment of Medicaid long-term care services.[10] At a minimum, Congress should establish better and fairer hardship criteria to mitigate the damaging impact of estate recovery. As it stands today, estate recovery offers a minimal benefit for state Medicaid budgets, while significantly harming low-income families and communities.

Additional Resources

Endnotes

  1. See, e.g., Justice in Aging et al., Medicaid Estate Claims: Perpetuating Poverty & Inequality for a Minimal Return (April 2021). ↑

  2. 42 U.S.C. § 1396p(b). ↑

  3. See e.g., Michele Lerner, One Home, A Lifetime of Impact, The Washington Post (Oct. 2020). ↑

  4. National Association of Counties, Affordable Housing Federal Programs and Legislation. ↑

  5. MACPAC, Report to Congress on Medicaid and CHIP, ch. 3 (Medicaid Estate Recovery: Improving Policy and Promoting Equity), at 72 (March 2021). ↑

  6. Id. at 89 (March 2021). ↑

  7. Naomi Karp et al., ABA Commission on Law and Aging, Medicaid Estate Recovery: A 2004 Survey of State Programs and Practices, at 51 (Table 3) (June 2005). ↑

  8. Office of Inspector General, Department of Health and Human Services, Report A-07-22-03254 (March 2024). ↑

  9. Because 30 is an even number, the median asset level is the mean of the 15th and 16th largest asset amounts. (1,289 + 1,774 = 3,063; 3,063 ÷ 2 = 1,531.5, rounded up to 1,532) ↑

  10. H.R.7573, Stop Unfair Medicaid Recoveries Act, (2024). ↑