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Today's overblown Obamacare fear: Will Medicaid take my house?

February 12, 2014|By Michael Hiltzik
  • Vice President Biden addressed a conference of the healthcare advocacy group FamiliesUSA last month on behalf of Medicaid expansion.
Vice President Biden addressed a conference of the healthcare advocacy… (Alex Wong/Getty Images )

The word is beginning to percolate through public discourse as the Affordable Care Act takes hold: If you're in the cohort receiving your healthcare through Medicaid, the government can seize your house later to pay for your bills.  

Is that really true? In technical terms and under limited circumstances, yes. But in real terms, that concern is vastly overblown, and certainly not a reason to shun the Medicaid option if it's offered to you. For the vast majority of enrollees, it won't be happening.

So let's distinguish facts from fears. 

To place the issue in context, the Affordable Care Act significantly expanded the availability of Medicaid to cover households earning up to 138% of the federal poverty line ($32,499 for a family of four). The act also widened Medicaid eligibility to cover childless adults in that income segment. The Supreme Court made that expansion optional for states, and so far, only 25 states and the District of Columbia have done so. That includes California, where Medicaid is known as Medi-Cal.

One thing the ACA didn't change was Medicaid's estate recovery rule. Under a law enacted in 1993, states are required to seek recovery from the estates of deceased enrollees for the costs of long-term care, such as nursing-home care. The recovery rule applied to those who received that care when they were 55 and older, or who were permanently institutionalized at any age.

States were given the option of seeking recovery of other costs, such as expenses unrelated to those patients' long-term care. And the states were required to inform Medicaid applicants of the existence of the estate recovery rule before they enroll, which may be one reason that concern about it is surfacing now.

The rule makes sense, says Matt Salo, executive director of the National Assn. of Medicaid Directors. Long-term care is the largest expense item in Medicaid's budget, and for many Americans Medicaid is the only option for obtaining affordable long-term care. The rule went into effect because Medicaid eligibility was typically asset-based--you had to have low-income and almost no assets other than a house and a car--and there were signs that clever estate planners were advising clients how to impoverish themselves on paper, enroll in Medicaid, and thereby keep their assets in the family.

Under the ACA, however, the asset test has gone by the board. Medicaid eligibility for the expanded programs is based on income alone, which means there might be some new members with low incomes but sizable illiquid estates, such as homes worth hundreds of thousands of dollars.

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