I get this question a lot and the answer is yes.

Let’s break it down in simple terms though.

First, what is Medicaid and Medicare?

Medicaid and Medicare are two separate programs, but they’re run by the same federal office called the “CMS Centers for Medicare & Medicaid Services”

For our purposes we’ll only be focusing on Medicaid because Medicaid is the program that has the power to go after your property. Medicare doesn’t. It’s important to make that distinguishment.

If you’re wondering whether you have Medicare or Medicaid, call your insurance. If you’re over 65 and pay for your insurance, you likely have Medicare. If you don’t pay for insurance, it’s likely Medicaid.

So how does medicaid work?

Medicaid is a program designed for people who can’t afford healthcare. To qualify for Medicaid you need to have less than $2,000 in “countable assets.” This includes your bank account, income, and a whole laundry list of other items and trusts and annuities regulations that are jam packed into the federal and state regulations. There are a lot of regulations that dictate what “countable assets” mean. But generally, think money, bank account, income, etc.

Medicaid is run not only by the federal government, but also the state. This arrangement is baked into federal and state law. So, for example in CT and in MA we have “Husky D” and “MassHealth.” Medicaid is provided through those state systems because it’s a dual arrangement between the federal government and state governments.

Now, the government doesn’t ever do anything for free. Let’s say you’re homeless, you’ve been on medicaid (Husky D in CT or MassHealth in MA) over the age of 55. Every time you’re sick you go to the hospital or you stay there overnight or a few days, etc etc. Those are all costs that were paid out by Medicaid at zero costs to you. The tax payer, through federal and state taxes, has footed your bill. Lets say your bill is $100,000 for several years of healthcare through Medicaid. If you die and never pay it back, then the government will never see that money again.

So in 1993 the ultra liberal trailblazer of social progress Bill Clinton said hey wait a minute. We’re losing money on all these poor people. And for what? just to keep them alive? Instead of finding ways to reduce healthcare costs and corporate greed, lets go after their legacies!

And that’s what happened.

Bill Clinton signed into law something called “ORBA”… Orba is a law that REQUIRES states to recover the costs of medicaid by taking your house when you die, or attacking your personal assets, or even taking settlements from civil lawsuits and injury suits. Orba gives Medicaid the right to bankrupt people.

There are some rules though. Medicaid can’t just come after you while you’re alive and say hey give me your house. They have to wait until you die or until you’re in a nursing home and not expected to come back. There are also certain homestead and spousal exemptions that shield against Medicaid, like if it’s your primary residence they can’t take your house. (Unless you’re single and it’s worth over 900k.. again, all techincal weird regulations you should ask your lawyer about)

In Massachussetts, Medicaid only recovers for money spent over the age of 55 or if you’re in a longterm nursing home.

Alright, enough legal mumbo jumbo cut to the chase… So whats the bottom line?

The bottom line (which can vary by person and situation) is this.

If you have been on Medicaid, either Husky D in CT or MassHealth in MA… They may have the right to take all your assets when you die to pay them back. That’s the bottom line.

Ok so how do I avoid this?

The federal government sets the regulations, and they want to take your money more than you want to keep it.

Without going into too much lengthy detail, they change the regulations relatively frequently and they set the rules. So once people start finding loopholes, the federal government just closes those loopholes.

One way to avoid the “estate recovery” is by dying penniless.

You may say, damn Jake that doesn’t sound fun.

I don’t mean literally penniless, but at least on paper… you have to have no assets for medicaid to recover.

Getting rid of money is tricky, some people use irrevocable trusts but remember, the Feds are stupid. You can’t have income, you can’t have money… It’s very hard to carve out a loop hole because Medicaid is a no-nonsense agency.

But you can save your house. I’ll talk more about that in another blog, but essentially you transfer legal ownership in your house to a loved one while you take a “life estate” back. So you get life use in the house and it’s no longer recoverable by medicaid when you die (as long as you meet the 5 year lookback period, which I’ll also cover in another blog)

If you’ve been in a car accident in CT or MA or if you need a will call me at 207 550 5604

or email me at Dresslerjake@gmail.com