Tell these 10 states: Don't let Medicaid take my house after I die

Thanks to the new health care law, millions more people now qualify for free health care under an expansion of the Medicaid program. Unfortunately, some of those people may end up having their homes seized by their state goverment after they die. Specifically, that risk applies to new Medicaid recipients 55 and older who live in 10 states: California, Colorado, Iowa, Massachusetts, Nevada, New Jersey, New York, North Dakota, Ohio, and Rhode Island.

Why? It goes back to an obscure federal law that allows states to pay themselves back for Medicaid benefits paid to some people after they die, drawing on the estates of those dead people. The law applies to everyone who gets Medicaid for nursing home care, but states have the option to extend it to all over-55 recipients of Medicaid—including, in the case of those 10 states, those taking advantage of the new expansion of benefits.

As the news of the threat of "estate recovery" has spread, some people are actually turning down Medicaid that they're entitled to. "We've heard of people having their children pay full premiums for private insurance because they want to leave their houses to their kids," Michelle Lilienfeld, senior attorney with the nonprofit National Health Law Program, said.

For months now, health advocates and state Medicaid agencies have been waiting for the federal government to issue "guidance" on whether it's kosher for states to go after the estates of over-55 Medicaid expansion recipients. Finally the guidance has appeared—and changes nothing for the time being.

In a letter to state Medicaid directors, the federal Centers for Medicaid and Medicare Services says that, sure enough, states can do this if they want.

But the letter makes it clear that the agency truly hates the idea: "CMS intends to thoroughly explore options and to use any available authorities to eliminate recovery of Medicaid benefits" for people getting expanded Medicaid. Apparently, CMS not been able to figure out a way to circumvent either the enabling law or the state's individual practices.

If you live in one of the 10 states and think this is a terrible idea, as we do, let your elected state officials know about it. But if you are eligible for Medicaid, don't even think of turning it down for this reason. Going without health insurance is an even more terrible idea. Granted, you can enroll in Medicaid at any time (whereas you can only purchase regular insurance during open enrollment). But without health coverage, you'll be missing out on important preventive and routine care.

The one encouraging thing about the government's guidance: if you're getting expanded Medicaid, the state government can't put a lien on your house while you're still alive, as it can for people whose nursing home bills are being paid by Medicaid. That means that once you're off Medicaid and onto Medicare, and live in a state that's still determined to take your house, you can get around it by signing it over to your children before you die.

"But before you transfer title to your home," Lilienfeld says, "make sure it is the right option for you. It's a personal decision that needs to be evaluated on a case-by-case basis."

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