Medicaid Law’s Estate-Recovery Process Misunderstood

Aug. 21–While Medicaid serves as a safety net for millions of older Americans who cannot afford long-term care, many recipients end up paying for those services after they die.

The federal estate-recovery law requires each state to try to recoup benefits from the estates of recipients.

Although the law has been in effect since 1993, many senior citizens and their heirs don’t know it exists, according to local experts.

And since about one in seven elderly Americans receives Medicaid coverage, that lack of understanding is a major problem, experts agree.

Medicaid recipients must have low incomes and few financial assets to qualify, but their homes and cars do not exclude them from eligibility. Therefore states must attempt to claim those assets after death.

The money is put back into the Medicaid program, which is paid for jointly by the federal and state governments.

In fiscal year 2004-05, Pennsylvania claimed $25.4 million from 3,210 estates.

Much of the misunderstanding about the law occurs because there is no federal system in place to inform older Americans, experts agree.

Some children of Medicaid recipients are stunned to learn they must sell the home they were set to inherit and use that money to pay for the treatment their parents received, said elder law attorney Greg Hartman of the St. Lawrence firm of Hartman, Hartman, Howe and Allerton.

Local elder-care experts agree that lack of public understanding about estate recovery is a problem in Berks County.

Some people won’t even apply for Medicaid because of misguided fears, said Kathie Gantert, Berks Office on Aging intake and ombudsman supervisor.

For example, a husband who is afraid he will have to forfeit his home may not seek care for his wife, she said.

“The law doesn’t work that way,” she said, because the homes of recipients are not taken if a surviving spouse resides there.

The state offers brochures on estate recovery, but many Medicaid recipients apparently don’t receive them or are confused by the rules, said Carole Procope, manager of Pennsylvania’s estate recovery program.

Those who are checking family members into care facilities usually receive information about the law, but they too often don’t understand it, she said.

“Admitting someone to a nursing home is a traumatic time for loved ones, and they are being bombarded with forms,” she said. “Often it doesn’t all sink in.”

Although the law is complicated, understanding it is crucial if you or a relative plan to receive Medicaid, said Jerry G. Fudeman, administrator of Berks Heim, the county nursing home.

“Otherwise you could really get surprised down the line,” he said. “Don’t wait to learn about the law until the situation is urgent.”

The law creates a dilemma for some Medicaid-eligible seniors who want to preserve their homes for their heirs, Gantert said.

Some of them choose not to apply for the federally funded care they need, she said.

“They have to decide whether to receive Medicaid or to have an estate to leave behind to their children,” she said.

Many aren’t poor when they enter nursing homes, but quickly use up their assets paying for that care, which in Pennsylvania averages $5,700 per month, Procope said.

They have no alternative but to apply for Medicaid, regardless of what will happen to their estates, Hartman said.

“Otherwise they can’t afford the care they need,” he said. “Their only other option might be selling their home.”

Some criticize estate recovery as a death tax that leaves people unable to hand down their assets to loved ones.

But state officials say the estate recovery is fair, and that Medicaid is not intended as a tool for estate protection.

People should pay for medical assistance if they are able, even if that means paying posthumously, said Charles Jones, director of third-party liability for the state Department of Welfare, which does Pennsylvania’s estate recovery.

In Pennsylvania, the money recovered is split between the state and federal Medicaid budgets, and those costs continue to rise.

The program cost $4 billion in Pennsylvania in fiscal year 2004-05, and about $290 billion nationwide.

Without estate recovery, taxpayers would be paying an even greater amount, Jones said.

Therefore the program saves money and allows the government to sustain the program for the poor, he said.

“Long-term care costs keep growing, and somebody has to pay the piper,” Jones said. “If we don’t recover this money that will leave a bigger tab for our taxpayers to pick up.”

—–

To see more of the Reading Eagle, or to subscribe, go to http://www.readingeagle.com.

Copyright (c) 2005, Reading Eagle, Pa.

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.