Iowa ‘Recouping’ Houses of Medicaid Recipients

On March 6 2023, a Reddit account shared a screenshot of a tweet about Iowa “recouping” the homes of Medicaid recipients with a sarcastic post to the subreddit r/WhitePeopleTwitter:

As of March 7 2023, the most upvoted comment asserted that the practice described was not new. Subsequent popular comments condemned the claims in the post, and suggested ways to avoid the scenario mentioned:

“This has been happening for decades. The sound financial decision for your survivors is to die quickly at home.”

“I hope the government’s letter at least came with a pair of bootstraps for the surviving family[.]”

“This is exactly what would’ve happened with my grandparents’ house if they hadn’t “sold” it to my dad. Since my grandmother outlived her very healthy retirement savings by about 10 years, she was on Medicaid and they would’ve taken her house as repayment. Crazy but it happens every day[.]”

The screenshot originated with a March 6 2023 tweet by NPR. On March 1 2023, the outlet tweeted a similar story with the same image attached:

Both posts linked to a March 1 2023 NPR.com article about “Medicaid clawbacks” and a family in Iowa. It opened with more information about one such “Medicaid clawback,” starting with a letter received by the family of decedent Frances Ruhl:

PERRY, Iowa — Fran Ruhl’s family received a startling letter from the Iowa Department of Human Services four weeks after she died in January 2022.

“Dear FAMILY OF FRANCES RUHL,” the letter begins. “We have been informed of the death of the above person, and we wish to express our sincere condolences.”

The letter gets right to the point: Iowa’s Medicaid program had spent $226,611.35 for Ruhl’s health care, and the government was entitled to recoup that money from her estate, including nearly any assets she owned or had a share in. If a spouse or disabled child survived Ruhl, the collection could be delayed until after their death, but the money would still be owed.

The notice said the family had 30 days to respond.

[…]

It seemed bogus, but it was real. Federal law requires all states to have “estate recovery programs,” which seek reimbursements for spending under Medicaid, the joint federal and state health insurance program mainly for people with low incomes or disabilities. The recovery efforts collect more than $700 million a year, according to a 2021 report from the Medicaid and CHIP Payment and Access Commission, or MACPAC, an agency that advises Congress.

NPR reported that individual states had “leeway” with respect to Medicaid clawbacks, adding that the state of Hawaii “recouped” only $31,000 in 2019. In the same year, Iowa recovered “more than $26 million,” a practice attributed in the story to third-party collection efforts:

Iowa uses a private contractor to recoup money spent on Medicaid coverage for any participant who was 55 or older or was a resident of a long-term care facility when they died. Even if an Iowan used few health services, the government can bill their estate for what Medicaid spent on premiums for coverage from private insurers known as managed-care organizations.

Another section of the article mentioned that the practice of seizing assets applied solely to Medicaid, a program typically associated with individuals of limited means who are under the age of 65. Recipients of Medicare, a program covering America’s senior citizens, were exempt from the practice:

Eric Einhart, a New York lawyer and board member of the National Academy of Elder Law Attorneys, says Medicaid is the only major government program that seeks reimbursement from estates for properly paid benefits.

Medicare, the giant federal health program for seniors, covers virtually everyone 65 or older, no matter how much money they have. It does not seek repayments from estates.

“There’s a discrimination against what I call ‘the wrong type of disease,'” Einhart says. Medicare could spend hundreds of thousands of dollars on hospital treatment for a person with serious heart problems or cancer, and no government representatives would try to recoup the money from the person’s estate. But people with other conditions, such as dementia, often need extended nursing home care, which Medicare won’t cover. Many such patients wind up on Medicaid, and their estates are billed.

A separate article published on March 5 2023 was in the format of a transcribed interview, featuring Ruhl’s daughter and Tony Leys, the author of the NPR article. Leys was asked to explain how the situation unfolded, and he explained:

Well, all state Medicaid programs are required by federal law to have an estate recovery program like this. But what’s really striking is that some states are much more aggressive about it than others, including Iowa as one of the most aggressive. And the idea behind it being that Medicaid is supposed to be a safety net program for people without much money. And so the original idea was, if you had a bunch of assets in your estate after you died, it was the state’s right to go scoop that to pay back. But the thing is, it winds up hitting families without very many resources because if you have a pretty good lawyer, you can set things up years ahead of time so that this doesn’t happen to you as much … It really varies by state what kind of assets are eligible to be recouped this way. But depending on the state you’re in, there are various kinds of trusts you can set up. But you have to do it years ahead of time. You can’t do it right when you’re signing up for Medicaid.

In the March 1 2023 article, Leys mentioned a proposed piece of legislation from 2022 (“H.R.6698 – Stop Unfair Medicaid Recoveries Act of 2022”) which addressed the problem (it stalled at the “introduction” stage):

[A Bill] To amend title XIX of the Social Security Act to repeal the requirement that States establish a Medicaid Estate Recovery Program and to limit the circumstances in which a State may place a lien on a Medicaid beneficiary’s property.

A “summary” tab added:

Introduced in House (02/09/2022)
Stop Unfair Medicaid Recoveries Act of 2022

This bill prohibits state Medicaid programs from using estate recovery to recoup the costs of benefits. States must withdraw property liens within 90 days of the bill’s enactment.

Under “bill text,” a link to the targeted, existing title XIX of the Social Security Act appeared alongside proposed changes:

SEC. 2. LIENS, ADJUSTMENTS, AND RECOVERIES FOR MEDICAL ASSISTANCE.

(a) Liens.—Section 1917(a) of the Social Security Act (42 U.S.C. 1396p(a)) is amended—
(1) in paragraph (1)—

(A) in the matter preceding subparagraph (A), by striking “plan, except—” and inserting “plan, except, subject to paragraph (4),—”; and

(B) in subparagraph (B), by striking “in the case of” and inserting “with respect to liens imposed before the date of the enactment of the Stop Unfair Medicaid Recoveries Act of 2022, in the case of”; and (2) by adding at the end the following:

“(4) Notwithstanding any preceding provision of this subsection, not later than 90 days after the date of the enactment of this paragraph, a State shall withdraw any lien imposed under paragraph (1)(B) that is in effect as of such date.”

An article about Iowa’s unusually aggressive practice of “recouping” Medicaid expenses through the seizure of assets like homes spread widely in early March 2023. In NPR’s reporting, several individuals confirmed the practice was accurately represented. Enforcement practices varied by state; a bill was introduced in 2022 in an effort to prevent “state Medicaid programs from using estate recovery to recoup the costs of benefits” disbursed through Medicaid, which stalled during the introduction phase.