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AARP Recommends Practices for Stronger Protections in State Medicaid Estate Recovery

New Study Provides States with Best Practices, Examples of Estate Recovery Notices, and Brochure

The AARP Public Policy Institute (PPI) released a report today that provides recommendations to address problems with Medicaid estate recovery, the federally mandated program that attempts to recover Medicaid's expenditures for long-term care from the estates of deceased Medicaid beneficiaries.

"All too often, estate recovery takes a family completely by surprise. Medicaid beneficiaries and their heirs should receive timely, relevant, and easy-to-read notices about their estate recovery obligations and rights, and states have an obligation to improve their notices and materials," said AARP Public Policy Director John Rother.

States should be sending clearly written estate recovery notices to Medicaid beneficiaries and heirs. States should also have fair and clear rules on waivers when recovery would cause hardship for the remaining family members and alternatives such as installment payments. However, the AARP PPI report, "Protections in Medicaid Estate Recovery," points to wide variations among states in public information: times at which they send notices, hardship waiver procedures, direct collections from banks, and maintenance of data for program evaluation.

The report is an important resource for states to use to improve their estate recovery protections. It contains model notice language and usable best practices. For example, one best practice recommendation is to make estate recovery information available to all Medicaid applicants like in California. Many states make their materials available in different languages, and Oregon, on request, converts its brochure into large print, Braille, other languages and on audiotape.

According to the study, estate recovery amounts are increasing at a modest rate, but the impact on state budgets is actually slight. Forty-nine states and the District of Columbia currently have estate recovery programs (Michigan does not have estate recovery). The amount recovered nationally in FY 2005 was $411 million—$81 million more than in FY 2003. States recovered an average of $8 million in 2005, compared with $6.5 million in FY 2003. However, the recovery amounts represent less than 1 percent of total Medicaid long-term care expenditures.

Estate recovery makes the Medicaid program very different from the vast majority of federal programs that do not require repayment. In most cases, states can attempt to collect funds from estates after institutionalized or older Medicaid beneficiaries die. Recoveries are possible when the beneficiary has a home, bank account or other assets when they die. The federal government requires states to waive recovery in situations where it will cause undue hardship, such as when the estate is a family farm or business.

"The report underscores the need for better government and private sector options to help people pay for their long-term care," Rother concluded.

The complete report can be accessed at: AARP is a nonprofit, nonpartisan membership organization that helps people 50+ have independence, choice and control in ways that are beneficial and affordable to them and society as a whole. We produce AARP The Magazine, published bimonthly; AARP Bulletin, our monthly newspaper; AARP Segunda Juventud, our bimonthly magazine in Spanish and English; NRTA Live & Learn, our quarterly newsletter for 50+ educators; and our website, AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. We have staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

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