by Joseph Belza, Ingrid Schroffner
and Matthew Taylor
Since 1993, Federal Law has required state Medicaid agencies to seek reimbursement from enrollees whenever possible.[i] The goal is to make the federal program more sustainable and to allow Medicaid to provide coverage to more low-income individuals and families. One mechanism for Medicaid reimbursement is estate recovery, a process by which state Medicaid agencies—here, the Division of Medical Assistance (DMA)—recover payments made to program members from their probate estate, if any.
Estate recovery sometimes comes as a shock to affected families and has been negatively characterized by the public unfamiliar with the process with inaccurate images—e.g., of a greedy government taking houses.[ii] This article explains the estate recovery process as it currently operates under the DMA’s Medicaid program, commonly known as MassHealth.
Whom does estate recovery affect?
The scope of estate recovery varies by jurisdiction. Each state agency sets its own criteria to define which members are affected and what types of assistance payments may be recovered. In Massachusetts, for MassHealth members dying on or after April 1, 1995, estate recovery does not apply except to medical assistance paid for (1) any services for persons age 65 and over when he or she received the assistance, (2) only services provided on or after October 1, 1993 for persons age 55 and over when he or she received the assistance, and (3) only services provided on or after March 23, 1991 for inpatients in a nursing facility or other medical institution regardless of age.[iii]
It is important to note that, unlike some other states, DMA currently recovers only from the MassHealth member’s probate estate.[iv] MassHealth does not seek reimbursement from families of the deceased member. If the probate assets are less than the amount owed to MassHealth, then the remainder of the claim is left unsatisfied. Moreover, as detailed below, there are important exceptions and waivers which limit or preclude estate recovery.
How does estate recovery work?
The estate recovery process begins after the death of a MassHealth member. M.G.L. c. 118E, §32(a) requires a copy of the probate petition and death certificate to be sent to MassHealth’s Estate Recovery Unit (ERU) by certified mail. The ERU also conducts regular cross-matches of new petitions with the probate courts. If a petitioner fails to send copies of the petition and death certificate to the ERU, “any person receiving a distribution of assets from the decedent’s estate [is] liable to [MassHealth] to the extent of such distribution” for which MassHealth is authorized to recover.[v]
After notification, the ERU checks the decedent’s records to determine if MassHealth has a “claim” for reimbursement in the probate proceedings. The ERU generates a medical billing printout calculating the total recoverable MassHealth payments and files a Notice of Claim for that amount, along with notice of the circumstances qualifying for deferral and waiver of recovery. The personal representative may request a copy of the medical billing printout.
The Notice of Claim presents the personal representative with three options: (1) pay the claim, (2) contest the claim, or (3) apply for an exception.[vi] Typically, the estate simply reimburses MassHealth in exchange for a Release of Claim. To contest a claim for reimbursement, the personal representative must reply in writing within 60 days of the Notice of Claim with sufficient documentation to support a finding that MassHealth’s claim is invalid or that an exception applies. Failure to respond within the 60 days statutory window is deemed an admission of the validity of the claim and that no exception exists.[vii] If the personal representative disallows the MassHealth claim, the ERU refers the case to the legal department of the Executive Office of Health and Human Services (EOHHS), which may file suit to enforce the claim.
For MassHealth estate recovery claims deemed valid, [viii] ERU works with the personal representative to collect payment. On a case-by-case basis, the ERU may accept alternative payment solutions, such as a promissory note secured by a mortgage deed. If the ERU is unable to resolve a claim or a personal representative is non-responsive, the legal division of EOHHS may seek a judgment and execution, which may be levied and suspended against any probate property of the deceased member by filing a Petition to Compel Payment in the probate court.[ix]
MassHealth will not enforce an otherwise valid claim in certain situations: if the estate qualifies for (1) a deferral, (2) a hardship waiver, or (3) a long-term care insurance exception. A deferral temporarily postpones collection of the claim during the lifetime of a surviving spouse, during the lifetime of any surviving child who is blind or permanently and totally disabled, or, for any surviving minor child who is not blind or permanently and totally disabled, until the child reaches the age of majority.[x] Further, MassHealth is required to grant waivers if estate recovery would impose an undue financial hardship on an individual who has survived the decedent.[xi] A waiver can be a permanent exemption. Where the probate asset includes real property, waivers are only available when a sale of real property would be required to satisfy the claim, and an individual was using that property as his or her principal place of residence at the time of the decedent’s death.[xii] Specifically, MassHealth repayment cannot be required for assistance provided on or after April 1, 1995 “while any of the following relatives lawfully resides in the property: (1) a sibling who had been residing in the property for at least one year immediately prior to the individual being admitted to a nursing facility or other medical institution; or (2) a child who (i) had been residing in the property for at least two years immediately prior to the parent being admitted to a nursing facility or other medical institution; and (ii) establishes to the satisfaction of the division that he provided care which permitted the parent to reside at home during that two year period rather than in an institution; and (iii) has lawfully resided in the property on a continuous basis while the parent has been in the medical institution.”[xiii] Additionally, that individual must meet several criteria. He or she must have lived in the decedent’s property for at least one year prior to when the decedent’s eligibility for MassHealth began, and he or she must continue to live there when MassHealth files its Notice of Claim. Moreover, he or she must have inherited or received an interest in that property. This individual becomes ineligible for the waiver if other devisees or heirs are forcing him or her to sell the property. Finally, the individual must be financially eligible to qualify; the gross annual income of his or her family group must be at or below 133 percent of the applicable federal poverty line. If granted, a hardship waiver is not immediately permanent. Rather, it exists conditionally for the first two years. If all of the above criteria are still met when MassHealth reviews the situation at the end of the conditional period, then the waiver becomes permanent.
Finally, MassHealth will not recover under certain conditions if the deceased member had a long-term care insurance policy that, when purchased, met minimum coverage requirements described in its regulations.[xiv] In order to qualify for this exception, the deceased individual must have (1) been institutionalized; (2) notified MassHealth that he or she had no intention of returning home; and (3) on the date of his or her or admission to a long-term-care institution, had long term-care insurance, that, when purchased, met the minimum coverage requirements of 211 CMR 65.00. The requirement that the member must have notified MassHealth that he or she had no intent of returning home in order for this estate recovery exception to apply has been strictly construed.[xv]
As the Massachusetts Supreme Judicial Court has noted, “Medicaid is, and always has been, a program to provide basic health coverage to people who do not have sufficient income or resources to provide for themselves.” Cohen v. Commissioner of the Division of Medical Assistance, 423 Mass. 399, 403-404 (1996), quoting from H.R.Rep. No. 265, 99th Cong., 1st Sess., pt. 1, at 72 (1985). Estate recovery is simply another facet of the federal law designed to ensure that the Medicaid program is able to continue to fulfill its mandate of serving those for whom it was intended.
[i] 42 U.S.C. § 1396p(b)(1)(B), inserted by Pub. L. No. 103-66, Omnibus Budget Reconciliation Act of 1993 (approved August 10, 1993).
[iii] M.G.L. c. 118E, §31(b). See M.G.L. c. 118E, §31(a) for estate recovery applicable to members who died prior to April 1, 1995.
[iv] M.G.L. c. 118E, §31(b). See M.G.L. c. 118E, §31(a) for estate recovery applicable to members who died prior to April 1, 1995.
[v] M.G.L. c. 118E, §32(a).
[vi] The exceptions are specifically delineated by statute and regulation. M.G.L. c. 118E, §§ 31, 32(d) and 33; 130 CMR 501.013(B) and (C), 130 CMR 515.011(B), (C) and (D), 130 CMR 515.014.
[vii] M.G.L. c. 118E, §32(d). Another important deadline to note: a 12% interest begins to accrue on the claim amount 4 months and 60 days after the appointment of the personal representative. M.G.L. c. 118E, §32(g).
[viii] Either because (1) the personal representative admitted to its validity, or (2) the personal representative did not contest the Notice of Claim or submit a request for and sufficient documentation to satisfy the requirements for an exception.
[ix] See M.G.L. c. 118E §32(g).
[x] M.G.L. c. 118E, §31(b). See 130 CMR 501.013(B), 130 CMR 515.011(C).
[xi] Id. (M.G.L. c. 118E, §31(b)).
[xii] 130 CMR 501.013 (C).
[xiii] M.G.L. c. 118E, §31(d).
[xiv] M.G.L. c. 118E, §32; 130 CMR 515.014, 130 CMR 515.011(B).
[xv] See Executive Office of Health and Human Services v. Heinmets, SU2010-2431D (Massachusetts Superior Court) July 15, 2011 (Cratsley, J.), aff’d, 83 Mass. App. Ct. 1118 (2013).
Joseph Belza is a second year J.D. candidate at Boston College Law School and staff writer on the Boston College Environmental Affairs Law Review. He was a 2015 legal intern at the Massachusetts Executive Office of Health and Human Services.
Ingrid Schroffner, an Assistant General Counsel at the Executive Office of Health and Human Services, is the lead attorney there for MassHealth Estate Recovery.
Matthew Taylor is a second year J.D. candidate at Boston College Law School and staff writer on the Uniform Commercial Code Reporter Digest-Journal. He was a 2015 legal intern at the Massachusetts Executive Office of Health and Human Services.