LTC Bullet: Medicaid Estate Recovery
Wednesday November 8, 2000
What follows are extended excerpts from an article entitled "She Helped Ailing Dad; State Sues for $120,000," by Nancy Weaver Teichert, published in the Sacramento Bee online edition on Oct. 16, 2000. We dedicate this Bullet (1) to all the politicians and bureaucrats who can't understand why Medicaid costs are so hard to control, (2) to all the long-term care insurance executives who wonder why more people don't purchase their product, and (3) to all the unsuspecting citizens who will suffer the insult of unnecessary Medicaid dependency and the injury of losing their estates. We'll have a few comments on these matters at the end of the article.
"Susan Gollas used to roll her father outside in his wheelchair so he could sit under a tree on their south Sacramento farm. He would listen to the birds, the sound of distant farm machinery and his grandchildren at play not far from where she sells vegetables today.
"She fed, bathed and cared for him for 13 years. And when her diabetic father needed 24-hour attention for the last two years of his life, Medi-Cal [Medicaid in California] picked up the tab for his nursing home care.
"Now, under California's estate recovery program, the state is suing Gollas for $120,000 to recoup the cost of caring for her father, Sadao Yorita. And Gollas, who wasn't aware that she would have to pay back the state when her father applied for Medi-Cal, will be forced to sell the 20-acre family farm she inherited from him and now works with her husband, Mario, and their three children.
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"While federal law requires states to pursue repayment from estates of Medi-Cal recipients, California's efforts have been criticized in a federal audit and restricted by class-action lawsuits. The program, which collected about $40 million last year from more than 2,400 estates, adopts policies without adequate notice or comment from the public, according to the audit by the Health Care Financing Administration.
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"County welfare offices give Medi-Cal applicants for long-term care printed information explaining that the costs will eventually be recovered, but the regulations are complex and advocates say an estate planner or attorney may be needed to help some understand the consequences.
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"'The people who get surprised the most have very modest estates, who don't have the education, the resources to go see a lawyer and do some Medicaid planning,' said Charles Sabatino, counsel to the American Bar Association's Commission on Legal Problems of the Elderly. [CLTCF Comment: Charlie Sabatino is also President-Elect of the National Academy of Elderly Attorneys (NAELA), the trade association of attorneys who artificially impoverish the elderly to qualify them for Medicaid nursing homes and assist them to avoid Medicaid estate recovery requirements.]
"Medicare covers only limited nursing home stays, so families often turn to Medicaid -- Medi-Cal in California -- to pay for long-term care. Faced with growing costs, the federal government has required states since 1993 to recover those expenses from Medi-Cal beneficiaries. Pam McBroom, chief of California's Estate Recovery Unit, said the eligibility requirements are liberal so many people over 55 can keep their homes and benefit from Medi-Cal. But that money needs to be repaid after their death.
"'They want as many folks as possible to be covered so that money can go back in to pay for additional benefits for others,' said McBroom.
"California has recovered $398 million from estates since 1981, when states could voluntarily choose to recoup costs although they were not mandated by the federal government.
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"'It shouldn't be a fluke of where you live and whether or not you obtain good legal counsel before you entered your nursing home,' said Faith Mullen, an AARP senior policy adviser. Since last year, county officials in California have been required by state law to tell people applying for Medi-Cal about how to transfer ownership of their property.
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"California Advocates for Nursing Home Reform says the best way to avoid an estate claim is not to have anything in your estate when you die. The nonprofit group also offers referrals to attorneys trained in elder law at (800) 474-1116.
"All Medi-Cal applicants who have a home they would like to leave to their children or someone else should declare an intent to return home on the Medi-Cal application. This will retain the home as an 'exempt' asset, and exempt assets can be transferred without affecting eligibility.
"Any transfers should be considered when the resident enters a nursing home.
"If you have a spouse in a nursing home and are concerned about an estate claim, you might consider having the institutionalized spouse's interest in the home transferred to you as the 'at home' spouse.
"Any such transfers mentioned above should be reviewed with a qualified attorney knowledgeable about Medi-Cal.
"For free legal advice, call Senior Legal Hotline of Northern California, (916) 551-2140 or (800) 222-1753 (CA only)."
"Source: California Advocates for Nursing Home Reform"
Does this article describe a tragedy? Yes. This family truly got caught in the Medicaid trap.
Would it help if Medi-Cal did not recover from the estate? It would help this family, but hurt many others by reducing funds available to the program intended to serve the genuinely needy.
What message does estate recovery send to the general public? Long-term care is your personal and individual responsibility. If you want to protect your estate (or your inheritance), then save or insure. Like the old Fram oil filter commercial, "It's pay me now or pay me later."
Are the people who recover from estates callous and heartless? To the contrary, they are passionate about and committed to estate recovery because they want scarce public welfare resources to go to the truly destitute for whom these taxpayer-financed funds were intended to go.
Does Medicaid estate recovery affect the marketability of private long-term care insurance? Of course. If you can ignore the risk of long-term care, avoid the premiums for private insurance, and shift the cost to taxpayers should you ever need expensive care (while preserving your estate), wouldn't you be a little less likely to purchase private coverage?
Is anyone ethically at fault in this scenario? Yes, indeed. People who evade the rules or help others do so (1) reduce the funds available to provide quality care to the needy, (2) send a dangerous message to the aging that the financial consequences of long- term care can be circumvented by the clever, and (3) undercut the marketability of private long-term care insurance which is ultimately the only way to achieve access to quality care at the most appropriate level for most Americans.
Are organizations like NAELA and the California Advocates for Nursing Home Reform acting responsibly when they fight to undermine the Medicaid estate recovery law? We'll leave that answer up to you.