Medicaid Estate Recovery Program

The Medicaid Estate Recovery Program (MERP) is a process initiated by U.S. state governments for recovering payments they made under the Medicaid program to program beneficiaries. The government recovers the sum of payments from the estate at the time of death of the program beneficiary.

States are required to recover long-term-care-related (LTCR) Medicaid expenses from people 55 or older when they received Medicaid, to the extent of at least probate estates. States also have the option to recover costs of all medical care for people 55 or older, and have a separate option to extend the recovery beyond a probate estate. This latter option is generally called "expanded estate recovery".

Historical Origin

The recovery was authorized and required by the Omnibus Budget Reconciliation Act of 1993.

Interaction With The Affordable Care Act

The Affordable Care Act was designed to provide affordable health insurance, of one form or another, to people without other forms of insurance.

It does this by

1. Retaining existing Medicaid programs ("traditional Medicaid"; which generally required both low incomes and very low asset levels), as well as
2. By starting a new class of Medicaid, expanded Medicaid, for people whose Modified Adjusted Gross Incomes (MAGIs) are no more than 138% of the Federal Poverty Level (FPL) and with no maximum asset levels, and as well by
3. Offering people with all income levels access to on-exchange insurance plans from private insurers, and offering sliding-scale income-based subsidies for those with MAGIs above 100% of the Federal Poverty level to 400% of the Federal Poverty Level provided people are not eligible for either a traditional Medicaid or expanded Medicaid or a Children's Health Insurance Program (CHIP), or an employer's or a family member's employer insurance program.

However, the goal of providing health insurance is interfered with if states exercise their option to recover costs of all medical care for people 55 or older. This is because people getting Medicaid or expanded Medicaid don't have what we would normally think of as insurance. Medical expenses are paid for the recipient at the time they are incurred, but must be paid back by the person's estate when they die. This makes the intended insurance more like a loan.

(People 55 or older getting Medicaid or expanded Medicaid do have an option of purchasing an ACA on-exchange plan without a subsidy, but this option may be unaffordable, since the class of people involved mostly have a MAGI at or below 138% of the Federal Poverty Level.)

This issue was noticed in various places starting from the time the ACA was passed .

Indeed, in late February 2014 (two months after the main ACA provisions went into effect) the Obama administration's department of Health and Human Services issued a letter stating that “CMS intends to thoroughly explore options and to use any available authorities to eliminate recovery of Medicaid benefits consisting of items or services other than long term care and related services in the case of individuals who are determined eligible for Medicaid benefits using the MAGI methodology." (Note that "MAGI methodology" for Medicaid eligibility refers to roughly those people added to Medicaid in expanded Medicaid.. One might argue with this chosen limit, and believe that, since the ACA is supposed to provide medical insurance to all, that the recovery should be stopped not just for MAGI-eligibles, but for all non-long-term-care related expenses, which would include people with non-long-term-care-related traditional Medicaids.)

Corrections and Attempts to Correct Interaction With The Affordable Care Act

State Corrections to Limit Non-LTCR estate recovery: A number of states which had had laws and regulations to do the non-long-term-care-related estate recovery stopped or limited the practice. These are:

NY (starting April 1, 2014)

CT (retroactive to ACA start; expanded Medicaid only; not extending to all non-long-term-care related)

WA (at ACA start)

OR (at ACA start)

CA (2017)

MN (2017) However, MN has language on the signature page of its ACA application that seems to leave open its option to estate recover from current Medicaid recipients if it changes its laws or regulations in the future, and/or to recover from Medicaid recipients in future years on ACA auto-renewals.

Pending Statewise Initiatives:

MA: MA currently indicates in its ACA application process, and in its regulations, that "The MassHealth agency will recover the amount of payment for medical benefits correctly paid from the estate of a deceased member" for most non-long-term-care-related Medicaids, including expanded Medicaid.

There are a pair of bills in the legislature (as of 8/16/19) designed to repair the problem, S734 and H1197.

Attempts to Repair Federally::

There was one by U.S. Rep. Rick Nolan from MN, in 2018, the "Medicaid Estate Recovery Fairness Act", which has been abandoned.

Supporters of such a bill point out that relying on states to stop non-long-term-care Medicaid estate recovery will result, even in states that do it, in people having to worry that the state will revers in the future, and as well retroactively reverse for people with Medicaid and expanded Medicaid in the current year.

Since the main provisions of the ACA started at the start of 2014, it may be taken that at that point, the policy of the country is that everyone is supposed to have affordable health insurance (with no estate recovery), and that Federal law change should be retroactive to start of 2014.

Effect of Estate Recovery on Validity of International Comparisons of Health Insurance Coverage Rates

Since the U.S. Census Bureau counts all people with a traditional or expanded Medicaid as insured, and many of those people are 55 or older, and live in states which still do non-long-term-care related Medicaid estate recovery (making the "insurance" not really what we think of as insuarnce, but rather being a "loan"), one might question whether comparing U.S. coverage numbers with those in other developed countries, which do not do the recovery is a fair comparison.

Effect of Invalid Medicaid Eligibility Determination at the State Level--The State May You Insist You Wait Until Your Death to Resolve

There have been reports of this in MN and MA.

States often will give residents the opportunity, upon request, to see their Medicaid accumulated medical expenses. However, if a person notices that some charge occurred because the state gave a person Medicaid or expanded Medicaid incorrectly, in the ACA application process, then the state may force the person to wait until they are deceased with the state's estate recovery unit, and have the estate negotiate the matter.

Thus, a person may apply for the ACA with a MAGI clearly above the expanded Medicaid 138% FPL cutpoint, and nonetheless be invalidly given either traditional or expanded Medicaid. Should they at that time and before the state and any Federal exchange involved can correct the problem, get very sick, and accumulate medical bills on the Medicaid, the state, even if it is clear its assignment to a Medicaid was incorrect, will often not allow any removal of the all medical expenses charges that will accrue to the estate until the person has died, leaving the person's estate to negotiate the matter, and find any relevant supporting documentation of the categorization error.

External links

• Medicaid Estate Recovery at the U.S. Department of Health & Human Services
• PPACA Q&A at FactCheck.org
• Minnesota Activists Stop Non-Long-Term-Care-Related Estate Recovery at Minnesota Moose Lake Star Gazette
• List of ACA Problems, Including Due to Estate Recovery at N. Spier Blog Page