PowerPoint Presentation

Iowa Medicaid

Estate Recovery

October 19, 2023

Estate Recovery - Related Laws

Federal Law:

Estate Recovery Law – 42 U.S.C 1396p(b)

Congress passed the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982, as the

first federal estate recovery law for Title XIX medical assistance, also known as

Medicaid. Some states had already been recovering medical assistance through state

laws for decades. Since TEFRA was not mandatory, others refused to implement

estate recovery. The Budget Reconciliation Acts of 1993 and 1994 then mandated

that states recoup Medicaid payments from the estates of recipients. States who

failed to implement an estate recovery program were to lose federal funds. This

mandate was upheld in West Virginia v. United States 289 F. 3rd 281 (4th Cir. 2002).

State Law:

In Iowa, the estate recovery program is provided under

Iowa Code Section

249A.53(2). Administrative rules are found in section 441 IAC 75.28(7)

Some Benefits of Estate Recovery

Estate Recovery helps reinvest money back into the

Medicaid program to help tax-payer dollars stretch

as far as possible to provide quality services and care

to its members.

Since Iowa began pursuing estate recovery in 1994,

over half a billion dollars have been reinvested back

into the Medicaid program.

How Far Can Estate Recovery Funds

Stretch?

In SFY2023, Iowa’s Estate Recovery unit collected

approximately $39 million. In that year this equated to:

 Care for 440 members in a Psychiatric Mental Institute for

Children (PMIC) facility, or

 Care for 447 members over age 65 in a nursing facility, or

 Care for 735 members receiving treatment for Breast and

Cervical Cancer, or

 Care for 5,814 pregnant women.

How Does Estate Recovery Work?

 After the death of a person who received Medicaid and was over 55

or a resident of long-term care, the value of their estate (if they have

one) is used to reimburse the Iowa Department of Health and

Human Services (HHS). This includes the cost of services that were

paid out for Medicaid benefits, including capitation fees paid to a

managed care plan (medical and dental), regardless of how much the

actual services cost the managed care plan.

 At the time of death, if the person has no assets in their estate, as

defined in Iowa Code 249A.53(2)(c), there is no recovery.

 Unlike many neighboring states, Iowa does not place liens on real

estate to secure a medical assistance debt.

Who is Subject to Estate Recovery?

Iowa’s Estate Recovery law requires HHS to be reimbursed

from the estate of a person who has received benefits under

Medicaid and is:

 Age 55 or older, or

 Under age 55 and residing in a nursing facility,

intermediate care facility for persons with an intellectual

disability, or mental health institute, and unlikely to return

home.

What Medicaid Cost is Included in Estate

Recovery?

At the time of death, all medical assistance paid by HHS

becomes a debt against the member’s estate.

This debt includes:

• All medical assistance paid out by HHS, including fee-for-

service claims, capitation rates to managed care plans

(regardless of how much the actual services cost the

managed care plan), and interest.

This debt does not include:

• Medicare cost-sharing and Medicare premiums for lower

income populations after January 1, 2010.

Capitation Rates - What are they?

 Most states today utilize Managed Care Organizations (MCOs) for

their Medicaid programs.

 One of the benefits of having MCOs, is that they are able provide

additional value-added services to members that are not part of

the standard required Medicaid coverage plan.

 When a state utilizes MCOs to administer Medicaid services, the

state pays the MCO a monthly capitation rate for each member

assigned to the MCO each month, to provide care for its

members.

 The calculation of these capitation rates are subject to many

different regulations for states to abide by.

Capitation Rates - Development

 Capitation rates must be reasonable (within a normal or acceptable range)

and comply with all applicable laws for Medicaid managed care.

 Capitation rates must be actuarially sound, which means the rates are

projected to provide for all reasonable, appropriate, and attainable costs

that are required under the terms of the contract.

 Iowa uses an actuary to develop capitated rates (a fixed monthly payment

for each person) for the MCOs.

 The state monitors the capitation rate through a medical loss ratio (MLR)

which is the sum of the MCOs’ incurred claims and expenditures.

 For more information on this topic, go to your Iowa Health Link Member

Handbook, and refer to the section on “RATE SETTING”. You can find it

online here:

https://hhs.iowa.gov/sites/default/files/Comm580.pdf?040620211416

Categorical Waivers

The medical assistance debt that comes due from the estate of a

deceased Medicaid member can be waived if:

• there is a surviving spouse, a child of any age of the deceased

member who has a disability or is blind, or

• there is a child under the age of 21

• deferrals of payment until death of the spouse, disabled or blind

child, or the minor child turns 21

Hardship Waivers

The collection of the debt would cause undue hardship for an heir or

beneficiary. Deferrals of payment are until the hardship no longer

exists or at death of the person who received the hardship waiver.

Undue hardship is defined as:

a. Having less than $10,000 in resources not including the home,

or a vehicle, and

b. Income at or below 200 percent of the poverty level, and

c. Collection of the debt would deprive the person of food,

clothing, shelter, or medical care.

What Part of an Estate Can Be Recovered?

The estate includes any assets owned by the deceased Medicaid

member or in which the member has an interest at the time of death.

This includes a house, saving account, jointly held property, retained life

estates, interests in trusts, annuities, IRA’s, pay-on-death accounts, etc.

Life insurance is generally not collectible, but if it is not reported, or if

it is converted to a burial fund, then there may be recovery from some

or all of the life insurance, depending on the facts of the case.

Priority of Debt Payment From an Estate

Probate rules govern how a person's final affairs are handled in each

state. Probate rules involve everything from establishing a probate

estate to choosing an executor, determining heirs, distributing property,

and paying debts.

When an estate does not have enough money to satisfy its debts, the

executor must carefully follow Iowa estate law to determine who to

pay first.

Even if there is no executor or probate opened in court, the Iowa

Probate Code governs how estates are to be handled for estate

recovery.

Who is Paid First?

Generally, the order of probate is:

1. Court costs

2. Costs of administration

3. Funeral expenses

4. Taxes and other debts to federal

5. Medical bills of last illness

6. Taxes owed to state

7. Medical assistance debt

8. Labor claims for deceased business owners

9. Unpaid child support

10.General claims (credit cards, older medical bills, etc.)

Recovery of Medicaid Trust

HHS is a beneficiary of Medicaid Trusts. These types

of trusts include:

• Medical Assistance Income Trusts, also known as

MAIT’s, Miller trusts, Qualified Income Trusts, or

Income Assignment Trusts

• Special Needs Trusts

• Pooled Trusts

Other Information on Estate Recovery

 The Federal government requires all states to have a Medicaid Estate

Recovery Program, but the laws, the resources devoted to the program,

and political climates vary greatly.

 Assets that could have been used to pay medical bills before death are

instead used to replenish Medicaid after death, much like a line of credit

that is due in full at death.

 Iowa stats: Of the total Estate Recovery cases opened (10,000/year),

about 65% have no recovery, and 20% have recovery of less than $2,000.

Comparison of Similar States - Slide 1 of 2

State Who is recovered What claims are recovered

Iowa

• Over the age of 55

• Any age if in a long-term care (LTC) facility with no reasonable expectation

of returning home

• FFS Claims

• Capitation Paid

• Medicare Savings Program (MSP) up to

01/01/2010

• All types of Medicaid claims both if over 55 or

institutionalized

Kansas

• Over the age of 55

• Any age if they have been in LTC in a nursing facility

• Nursing Facility (NF) Care

• HCBS (Waiver) and any related hospital care

and prescription drug services provided while

receiving NF care at home or in a community

setting.

• FFS Claims

• Capitation Paid

• MSP up to 1/1/2003

• No recovery if the recipient is ONLY on a

MSP

Minnesota

• Over age 55 and a Medicare Advantage (MA) member receiving Long Term

Care Services (LTCS) and Supports

• Any age if institutionalized

• An MA claim includes capitation payments

made to managed care organizations (MCOs)

for coverage of these services.

Nevada

• Over the age of 55

• Any age if permanently institutionalized

• FFS Claims

• Capitation Paid

• Medicare Savings Program (MSP) up to

01/01/2010

• All types of Medicaid claims both if over 55 or

institutionalized

North Dakota

• Over the age of 55

• Any age if permanently institutionalized

• FFS Claims

• Capitation Paid

South Dakota

• Over the age of 55

• Any age if permanently institutionalized

• FFS Claims

• Capitation Paid

• Prescription drug services provided while in

an institution

Comparison of Similar States (Slide 2 of 2)

State

State Specific Exemptions, Exclusions or Waivers

Iowa

Hardship waiver for:

• Undue hardship if income less than 200% of Federal Poverty Level (FPL) AND

• Less than $10K in assets AND

• The waiver is also deferred

Kansas

Hardship waiver for:

• Undue hardship to the heirs of the estate. Determined on a case by case basis.

Minnesota

Hardship waiver for:

• Business in home

• Public assistance

• Other compelling circumstances

Nevada

Hardship waiver if:

• Asset is sole income producing asset of waiver applicant

• Public assistance eligibility

• There is a doctor’s written verification of a medical condition that compromises the applicant’s

ability to pay

• Resided in home for at least 2 years prior to death or going into an institution

North Dakota

Hardship waiver for:

• Undue hardship to the heirs of the estate. Determined on a case by case basis.

South Dakota

Hardship waiver for:

• Undue hardship to the heirs of the estate. Determined on a case by case basis.

Links to Iowa Medicaid Estate Recovery

 Medicaid Application – Application for Health Coverage and

Help Paying Cost

 Iowa Medicaid Website – Iowa’s Estate Recovery Law

 Comm. 123 – Important Information for You and Your Family

Members about the Estate Recover Program

 Comm. 266 – Iowa’s Estate Recovery Law

 Handbooks:

• Comm. 476 - IA Health Link Member Handbook

• Amerigroup Member Handbook

• Iowa Total Care Member Handbook

• Molina Member Handbook

Estate Recovery Contact Information

Iowa Estate Recovery

Department of Health and Human Services

317 6

Avenue, Suite 600

Des Moines, IA 50309

To l l -free 877-463-7887

Local: 515-246-9841

Ben Chatman

Operations Manager, Estate Recovery Program

Questions