Obamacare Fine Print: Beware the Medicaid and Medi-Cal Clawbacks and Liens

Courtesy of Mish.

Obamacare greatly expanded Medicaid coverage, but there is a hidden gotcha that may come back and haunt your heirs for benefits you receive from age 55-64.

This is not new news, but few read and understand the “fine print”.

In a warning about the “fine print” and in response to Moral Dilemma: Should a Libertarian Who Does Not Need Food Stamps, but Qualifies for Them, Take Them? reader “TL” writes …

Hello Mish,

Your friend Steven may want to carefully research taking Medi-Cal benefits.

Medi-Cal, and many other state Medicaid programs include a ‘claw-back’ provision for recovery of costs incurred by the state to provide medical care.  While there is much variation in particulars from one state to another, the bottom line is these costs include a monthly ‘administrative fee’

The ‘claw-back’ mechanism functions via the state placing ‘liens’ on individual assets at the point the Medicaid recipient reaches age 55, then recovers the money at the point the Medicaid recipient dies by ‘seizing’ the money from the estate.

When first put into effect, these ‘claw-back’ provisions were primarily intended to recover costs to the state of providing long term nursing home care for older recipients. 

ObamaCare’s expanded Medicaid has, of course, now waived the assets portion of the ‘means test’.  But under current law, those assets are subject to ‘claw-back’. 

At the moment, the monthly ‘administrative fee’ amount for Medi-Cal is $611.  Those who sign up for Medicaid may not be doing themselves any favors.

Medi-Cal Clawbacks and Liens

The California Healthcare Foundation explains the rules in Estate Recovery Under Medi-Cal

Medi-Cal estate recovery refers to state action to reclaim certain Medi-Cal costs from the estates of beneficiaries after their death. This program, which has been in place for decades, has received renewed attention from policymakers because of reports that some individuals newly eligible for Medi-Cal as expanded under the Affordable Care Act (ACA) may not enroll for fear that their house and assets could later be seized.

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