Another ObamaCare Surprise: Estate Recovery

By:  Bob Adelmann
12/20/2013
       
Another ObamaCare Surprise: Estate Recovery

Another surprise from ObamaCare: if you sign up for Medicaid you essentially will your home to the government when you die.

Sofia Prins and Gary Balhorn were about to sign applications for free coverage under Washington State’s Medicaid program — recently expanded under ObamaCare — when Sofia began reading the fine print: If you’re over age 55, the state of Washington will bill your estate for your health expenses when you die.

So much for “free.”

Prior to ObamaCare, state Medicaid programs (enacted in 1965 and expanded in 1993) offered help to poor people who couldn't afford health coverage but required states to recover their health costs from their estates when they died. However, state exemptions for personal goods and residences meant that such “estate recovery” efforts were modest as most people either had no other assets or had “spent down” those that they had to a minimal level.

But with the expansion under ObamaCare, more and more people will qualify for Medicaid without realizing that the coverage is really not free, but instead a hidden secured loan whose terms aren't explicit. As Carol Ostrom, the Seattle Times health reporter, explained:

The way Prins saw it, that meant health insurance via Medicaid is hardly “free” for Washington residents 55 or older. It’s a loan, one whose payback requirements aren't well advertised. And it penalizes people who, despite having a low income, have managed to keep a home or some savings they hope to pass to heirs, Prins said.

Sofia and Gary lived together, she as an artist and he as a tango instructor, and when they saw that they would see their assets evaporate under estate recovery rules if they signed up for Medicaid, they decided to get married. That way, their combined incomes qualified them for ObamaCare coverage on the state exchange, helped along with some federal subsidies. Said Sofia:

We’re happy to be getting married. Unfortunately not everyone has such an elegant solution to the problem.

No, they don’t. Barry Blake lived with his mother who owned her own home and was covered under Medicaid. When she died, the state of Kentucky “took the house ... to be sold and pay those expenses” according to a suit Blake filed to recover it in 2009. The state also took the washer and dryer, their lawn mower, gardening tools, kitchen appliances and other personal items. Blake hadn't read the fine print. The lawsuit was dismissed.

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