Some forgo Medicaid coverage, fearing that state will seize their assets
Add this to the litany of scary but improbable things people are hearing could happen because of the federal health care law: After you die, the state could come after your house.
The concern arises from a long-standing but little-known aspect of Medicaid, the state-federal program that provides health coverage to millions of low-income Americans. In certain cases, a state can recoup its medical costs by putting a claim on a deceased person's assets.
This is not an issue for people buying private coverage on online marketplaces. And experts say it is unlikely that the millions of people in more than two dozen states becoming eligible for Medicaid under the program's expansion will be affected by this rule. But the fear that the government could one day seize their homes is deterring some people from signing up.
“I was leaning toward not getting Medicaid, because there is somewhat of a stigma,” said Steve Olin, 60, a former copy editor from Eureka, Ill. “Then, when I heard about the estate recovery, I was really sure.”
It is the latest anxiety to spring from the health care law. After years of speculation about the sprawling legislation, which affects everything from the way people see their doctors to their finances, is now a reality — and in some cases is sparking fear.
Some worries stem from the law's unintended consequences, such as last year's cancellations of health plans by insurers whose old policies did not meet the new standards. The flare-up shook public confidence in the Obama administration's forthrightness about the impact of the measure.
Opponents of the law have held up its flaws and have embraced the Medicaid issue as well.
“State can seize your assets to pay for care after you're forced into Medicaid by Obamacare,” warned a writer on the conservative site HotAir.com. Another conservative blog, RedState.com, warned of a “Medicaid asset-seizure bonanza.”
Asset recovery predates the health care law, but the legislation makes it apply to a larger pool of people.
About half of the states took an option to expand Medicaid to anyone who makes up to 138 percent of the poverty level, or $15,900 for an individual. That includes childless adults and people with significant assets besides a home, who had been excluded in most states.
In 1993, concerned about rising Medicaid costs, Congress made it mandatory for states to try to recover money from the estates of people who used Medicaid for long-term care, which can cost taxpayers hundreds of thousands of dollars per person. They included exceptions in cases in which there is a surviving spouse, a minor child and other situations.
Congress gave states the option to go further: to target the estates of all Medicaid recipients for any benefits they received after 55, including routine medical care. Many states took that route, including Oregon, which from July 2011 to June 2013 recovered $41 million from about 8,900 people.
The argument had been: “If you're receiving a public benefit and the state is trying to support you, you should give back if you are able,” said Judy Mohr Peterson, Oregon's Medicaid director.
When the Affordable Care Act made it mandatory for most people to carry health insurance, Oregon's Medicaid office decided the approach needed to be changed because asset recovery was scaring people into not signing up for coverage. So new rules took effect last year to make sure that those signing up for the Medicaid expansion would not be subject to asset recovery.