MassHealth Estate Recovery notice

[Mykle57]

FIREd 4+ years ago. Been keeping my income very low, pulling about $10k from my Rollover IRA; remainder from post-taxed accounts. e.g., taxable income near zero).

Back then there was a health care mandate. Applied for ACA in my state and at my income level, was given a MassHealth plan. For those not familiar, it's a free health care plan for low income people (i.e., Medicade). That'd be me; I'm low income, but, by choice. In great health, rarely visit my doctor. So, just coasting with this plan until reaching Medicare age.

Today I get in the mail titled "Important Information about MassHealth Estate Recovery Requirements". Summarized, MassHealth will seek repayment from the estate for the total amount MassHealth paid for care. Any Property or assets that are part of the probate estate are subject to estate recovery.

Anybody else getting this notification?

 

[marko]

According to MassHealth: About Estate Recovery
Federal and state Medicaid law requires MassHealth to recover assets from the estates of certain MassHealth members after their death. This process is called “estate recovery.” The assets are used to reimburse (pay back) the state for the cost of care that MassHealth paid for the member.

See this link: https://www.mass.gov/info-details/massachusetts-medicaid-estate-recovery

Sounds like they may think you're no longer alive (?)
Regardless, it does sound like when you do pass, they'll be in line to recover you Medicaid costs.

 

[jim584672]

FIREd 4+ years ago. Been keeping my income very low, pulling about $10k from my Rollover IRA; remainder from post-taxed accounts. e.g., taxable income near zero).

Back then there was a health care mandate. Applied for ACA in my state and at my income level, was given a MassHealth plan. For those not familiar, it's a free health care plan for low income people (i.e., Medicade). That'd be me; I'm low income, but, by choice. In great health, rarely visit my doctor. So, just coasting with this plan until reaching Medicare age.

Today I get in the mail titled "Important Information about MassHealth Estate Recovery Requirements". Summarized, MassHealth will seek repayment from the estate for the total amount MassHealth paid for care. Any Property or assets that are part of the probate estate are subject to estate recovery.

Anybody else getting this notification?

Each state can vary on how it interprets the Federal mandate for Medicaid Estate Recovery. Most do not recover for ACA expansion Medicaid costs. It looks like Mass may be one of the few that does. Any costs over the age of 55 (55 inclusive) are recoverable. This includes the monthly capitation costs for managed care plans. One way out is to get your income over the 138% FPL level and get to an ACA plan which doesn't have recovery.

 

[donheff]

Sounds like that is an issue for anyone who was on Medicaid. If you have expensive medical treatment during that period it could be costly. For people with a big portfolio it sounds like it might be worth generating enough income to qualify for a highly subsidized ACA plan and avoid Medicaid. Another factor in your Roth conversion considerations.

 

[jim584672]

Sounds like that is an issue for anyone who was on Medicaid. If you have expensive medical treatment during that period it could be costly.

If someone is on a Managed Care plan (most places have this) your actual medical costs are not considered, just the monthly capitation fee paid to the plan. Only fee-for-service would be actual costs.

 

[marko]

One way out is to get your income over the 138% FPL level and get to an ACA plan which doesn't have recovery.

Sounds like OP did too good of a job here.

 

[donheff]

If someone is on a Managed Care plan (most places have this) your actual medical costs are not considered, just the monthly capitation fee paid to the plan. Only fee-for-service would be actual costs.

Could the state claim the capitation fee they paid to the plan? That alone could be substantial. The whole thing sounds like a gotcha that could prove costly to an ER'er trying to get by with very low taxes in the early years before Medicare. If you get a highly subsidized regular ACA plan this isn't an issue.

 

[ncbill]

Another reason for those who are ER to "manage" their mAGI to above the federal poverty limits to qualify for a (heavily subsidized) ACA plan instead of Medicaid.

 

[jim584672]

Could the state claim the capitation fee they paid to the plan? That alone could be substantial. The whole thing sounds like a gotcha that could prove costly to an ER'er trying to get by with very low taxes in the early years before Medicare. If you get a highly subsidized regular ACA plan this isn't an issue.

Yes the monthly capitation fee is recoverable.

 

[Mykle57]

Thanks for the replies. Just wondering if anyone else got a similar notice. Guess when this comes due it'll have loads of fees and compounded interest but, I'll be long gone. A bit disappointed by the retroactive nature of the notification and no idea of actual costs incurred.

 

[Montecfo]

Could the state claim the capitation fee they paid to the plan? That alone could be substantial. The whole thing sounds like a gotcha that could prove costly to an ER'er trying to get by with very low taxes in the early years before Medicare. If you get a highly subsidized regular ACA plan this isn't an issue.

Well, it certainly is rational from a taxpayer perspective.

 

[gauss]

My understanding is that the ACA was supposed to remove the asset test for Medicaid expansion.

Seems to me that trying to recover the assets after your demise is a bit disingenuous and not consistent with the intent of the original law.

 

[ivinsfan]

Thanks for the replies. Just wondering if anyone else got a similar notice. Guess when this comes due it'll have loads of fees and compounded interest but, I'll be long gone. A bit disappointed by the retroactive nature of the notification and no idea of actual costs incurred.

Well you know free stuff is never free, someone pays for it, it might as well be you.

 

[cathy63]

Federal law requires estate recovery from Medicaid recipients for some specific services, and it gives states the option to recover for general costs. It sounds like Mass is one that exercises their option to recover all costs. This is not new, it has been part of the law since 1965.

https://www.medicaid.gov/medicaid/eligibility/estate-recovery/index.html

State Medicaid programs must recover certain Medicaid benefits paid on behalf of a Medicaid enrollee. For individuals age 55 or older, states are required to seek recovery of payments from the individual's estate for nursing facility services, home and community-based services, and related hospital and prescription drug services. States have the option to recover payments for all other Medicaid services provided to these individuals, except Medicare cost-sharing paid on behalf of Medicare Savings Program beneficiaries.

They cannot recover costs from your estate if you are survived by a spouse or child under age 21, so perhaps you could arrange to acquire the right types of relatives ...

 

[jim584672]

If you have accounts set up with Transfer on Death it avoids the Probate court and any recovery. Also move real estate to a Life Estate Trust so the title transfers at death, that also avoids Probate.

 

[ivinsfan]

If you have accounts set up with Transfer on Death it avoids the Probate court and any recovery. Also move real estate to a Life Estate Trust so the title transfers at death, that also avoids Probate.

Well after MIL died the state who was paying her bills froze her bank account and emptied it

 

[jim584672]

Well after MIL died the state who was paying her bills froze her bank account and emptied it

It depends on the state. Some only recover from anything in Probate.

 

[ivinsfan]

It depends on the state. Some only recover from anything in Probate.

just adding to your first post which didn't mention that.

 

[jim584672]

Just thinking on this, I see no reason why you couldn't just gift your estate prior to your death. There is no penalty since you are not on elderly Medicaid with its look back period.

 

[EastWest Gal]

My understanding is that the ACA was supposed to remove the asset test for Medicaid expansion.

Seems to me that trying to recover the assets after your demise is a bit disingenuous and not consistent with the intent of the original law.

Estate recovery was written into law in 1993. Many states attempt to recover the costs of long term care only, a handful try to recover all Medicaid costs after age 55.

Medicaid expansion and the ACA greatly expanded estate recovery. There’s nothing disingenuous about it. Without Medicaid expansion, some people have an income too high for Medicaid and too low for the ACA.

If you want to avoid this, give away your estate before you die, or put it into an irrevocable trust.

 

[CardsFan]

Well, it certainly is rational from a taxpayer perspective.

Well you know free stuff is never free, someone pays for it, it might as well be you.

+1

Not sure what the problem is. OP is getting free health care, that he/she (apparently) could afford to buy, but chooses not to. When his/her time is up the state is just saying "Oh, by the way, if you have any money left, we want ours back before anyone else gets it". Seems fair to me.

 

[youbet]

Seems fair to me.

Yeah, me too. Especially public dollars used to pay NH expenses when the client in fact has the money to private pay but has found a way to hide it.

 

[Bamaman]

Looks like a good time to move to Florida--like so many others in the region.

Then when you pass, Massachusetts won't know you're even gone.

 

[jim584672]

Yeah, me too. Especially public dollars used to pay NH expenses when the client in fact has the money to private pay but has found a way to hide it.

With elderly Medicaid you need to spend down all assets to a very small amount before you can qualify for it. So it isn't like people are hiding stuff, except for estate planning, and that needs to be done 5 years in advance.

 

[CardsFan]

With elderly Medicaid you need to spend down all assets to a very small amount before you can qualify for it. So it isn't like people are hiding stuff, except for estate planning, and that needs to be done 5 years in advance.

For some, "Estate Planning" IS hiding Stuff. You even acknowledge that with the reference to the 5 year look back.

But in the case of the OP, he/she apparently has high (enough) assets, reports low income (no problem with that), and qualifies for and receives Medicaid health insurance (here is the problem).

OK, they are playing the system. Nothing illegal. But the system also has a way to play them after death. Pay me now, or pay me later. But if you have the money, you WILL pay me.