With more working Americans eligible for expanded Medicaid health insurance there is also a growing fear that some government agency will want to seize a recipient’s assets to pay for the health care expenses. Fortunately, the expanded Medicaid, Medi-Cal in California, works under slightly different rules and provides some protection against “claw back” of assets to satisfy health care debt. However, one age group may be subject to Medi-Cal estate recovery rules under expanded Medicaid.
Medi-Cal claws back assets of some residents
While the expanded Medicaid program is part of the Affordable Care Act implementation, each state manages their Medicaid program. Even though the federal government will be funding 100% of the expanded Medicaid health insurance for the first three years, states share up to 50% of original Medicaid costs for low income children and adults. California implemented estate recovery rules to “claw back” or recover some of the costs associated with providing health care services. These assets recovery rules are still applicable to expanded Medi-Cal in California.
Over 55, asset recovery is invoked
Eligibility for expanded Medicaid is based on the household income and not on the assets of the individual or family. However, Medi-Cal will attempt to recover any payments made on behalf of individuals over 55 years old or institutionalize in a skilled nursing facility. This is consistent with their past assets recovery regulations under original Medi-Cal.
Medi-Cal only tries to recover its costs for medical assistance when a recipient is over 55, or when a member of any age is cared for at an institution, such as a nursing home. If you are under 55, you can sign up for Medi-Cal knowing that nothing will happen to your assets unless you are institutionalized. For those over 55 or in an institution, the Department of Health Care Services may present a claim for the cost of your care. It would be paid from your estate at the time of your death, and would not seek payment during your lifetime or the lifetimes of your surviving spouse, disabled son, or daughter, or while your child is under 21 years of age. For more information, please visit Third Party Liability. – From California Department of Health Care Services FAQs.
California Medi-Cal Estate Recovery Program
The Medi-Cal program pays for medical services and premiums, including payments to managed care plans, for people who are unable to pay for their own care. Upon death, the decedent’s estate or any recipient of the decedent’s estate may have to pay the costs of care back under federal and state law. Repayment will come from the assets of the deceased Medi-Cal beneficiary and will not exceed the asset value. – From CDHCS Estate Recovery Program
Med-Cal estate recovery exemptions
Medi-Cal won’t attempt to recover or claw back any health care services payments made on behalf of the beneficiary under the following circumstances
- During the lifetime of a surviving spouse.
- For Medi-Cal services provided before the beneficiary’s 55th birthday (unless the beneficiary is institutionalized).
- If the Medi-Cal beneficiary is survived by a child under 21 years old.
- If the Medi-Cal beneficiary is survived by a child who is blind or disabled (as defined by the Federal Social Security Act).
From CDHCS flyer on the asset recovery program.
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IRS handles the tax credit claw backs
Expanded Medicaid and the Advanced Premium Tax Credit programs are ultimately handled by either the state Medicaid agency or the IRS respectively. The IRS has not provided any guidance on how any Medicaid assistance might be recovered when filing 2014 taxes because that is a state issue. Their concern is whether the tax payer was eligible for Medicaid and not the tax credits. There may be situations when the tax payer was eligible for expanded Medicaid, but continued to receive Advanced Premium Tax Credits, where the IRS will request repayment of tax credits. (See: IRS limits over payment of advanced premium tax credits)
Safety net for older Americans with a caveat
While it is comforting to know that the loss of a job will not imperil the health care coverage of workers over 55 in California, there is still a certain amount of angst about the preservation of assets after death. The reality of the situation is that Californians over 55 years old on Medi-Cal have a running meter of health care expenses that the state may ultimately try to retrieve upon the resident’s death.
Annual Medicaid eligibility determination
Expanded Medicaid is also determined once a year. If an individual or family is deemed eligible at the beginning of the year, they maintain that status for the entire year. Conversely, if the state or federal exchange determines a household is eligible for Advance Premium Tax Credit at the beginning of the year, that is maintain unless the household reports a change to the household or income.
Medi-Cal Estate Recovery
Since I first posted this blog the California HealthCare Foundation issued a report on how California’s Medi-Cal estate recovery regulations will impact individuals over 55 years of age on Medi-Cal and who are subject to estate recovery. Medi-Cal beneficiaries will be responsible for the monthly capitated amount paid to the managed health care plan on their behalf, but not the cost of care which was paid for by the HMO. Download the full report.
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See also: Medi-Cal average monthly cost per member is $611
How the IRS views expanded Medicaid
From the IRS final regulations on the Health Insurance Premium Tax Credit
Example 5. Determination of Medicaid
ineligibility. In November 2014, Taxpayer G
applies through the Exchange to enroll in
health coverage for 2015. The Exchange
determines that G is not eligible for Medicaid
and estimates that G’s household income will
be 140 percent of the Federal poverty line for
G’s family size for purposes of determining
advance credit payments. G enrolls in a
qualified health plan and begins receiving
advance credit payments. G experiences a
reduction in household income during the
year and his household income for 2015 is
130 percent of the Federal poverty line
(within the Medicaid income threshold).
However, under paragraph (c)(2)(v) of this
section, G is treated as not eligible for
Medicaid for 2015.
Example 6. Mid-year Medicaid eligibility
redetermination. The facts are the same as in
Example 5, except that G returns to the
Exchange in July 2015 and the Exchange
determines that G is eligible for Medicaid.
Medicaid approves G for coverage and the
Exchange discontinues G’s advance credit
payments effective August 1. Under
paragraphs (c)(2)(iv) and (c)(2)(v) of this
section, G is treated as not eligible for
Medicaid for the months when G is covered
by a qualified health plan. G is eligible for
government-sponsored minimum essential
coverage for the months after G is approved
for Medicaid and can receive benefits,
August through December 2015.
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