The Centers for Medicare and Medicaid Services (CMS) has released a letter to states with guidance on how to apply Medicaid's estate recovery and transfer of asset provisions to individuals newly eligible for Medicaid under the Affordable Care Act (ACA). In general most of the long-term care rules that apply to traditional Medicaid recipients will continue to apply. While these individuals may be subject to estate recovery, CMS says, it should ideally be limited to long-term care benefits.
The ACA creates a new category of Medicaid recipients by giving the states the option of expanding Medicaid eligibility to individuals and families with incomes up to 133 percent of the poverty line. Eligibility for this category is calculated on the applicant's modified adjusted gross income (MAGI) and there is no asset requirement, unlike traditional Medicaid.
Questions arose as to whether this new MAGI category of Medicaid recipients would be subject to estate recovery and other Medicaid rules. With the realization that their house might be subject to estate recovery was giving some individuals with low incomes second thoughts about signing up for Medicaid.
CMS's letter to state Medicaid directors explains that although states may not put liens on MAGI recipients' property, regular estate recovery rules do apply. Recognizing that this could be a barrier to enrollment, the letter provides that CMS will try to eliminate recovery of Medicaid benefits for anything other than long-term care and encourages states to limit the scope of recovery against MAGI recipients. In addition, according to CMS, while there is no asset requirement to be eligible for MAGI, there are requirements to be eligible for long-term care services, so transfer-of-asset rules will apply to MAGI recipients who receive long-term care.
To read the CMS letter, click here.