Did you know? Medicaid is the only public benefit program in the U.S. that requires states to seek to get money back from long-term users once they die. We were surprised by the details. You may be, too. Additionally, the 2024 emergency savings report is out. 

Medicaid's Money Back Law

After someone who received long-term Medicaid benefits dies, federal law requires states to seek reimbursement from their assets - usually homes. 

Surviving family members may have to sell the house to repay Medicaid or the state may seize the property.

The New York Times published a feature this week with more details, which caught our eye.

A policy that doesn't serve its intended purpose

A bill, the Stop Unfair Medicaid Recoveries Act, has been reintroduced in Congress to end the practice.

The policy started in 1993 when Congress mandated that when Medicaid beneficiaries over age 55 have used long-term services, such as nursing homes or home care, states must try to recover those expenses from the beneficiaries’ estates after their deaths.

The goal was to try to recoup money from some higher-income seniors who hired lawyers to help shield their assets so that Medicaid would pay their nursing home bills.

But in practice, the states mostly pursue claims against low-income families, many of them Black and Hispanic. The average wealth of deceased Medicaid recipients over age 65 is less than $45,000 and the average home equity is $27,364.

The subpar stats on collections 

According to the Medicaid and CHIP Payment and Access Commission, an independent agency that advises the federal government and states on Medicaid issues, in 2021 states collected $733 million through estate recovery in the fiscal year of 2019.

That amounts to only about one half of a percent of Medicaid’s long-term-care expenditures, according to MACPAC. Only eight states collected more than one percent of expenditures.

While the recouped money is low, the negative impact on the deceased family's ability to retain generational wealth is high.

>>View our Insurance unit lesson, How to Access Health Insurance

2024 Emergency Savings Report Out Now

In case you missed it last month, Bankrate released their annual emergency savings report.

More than one in three Americans have more credit card debt than emergency savings.

However, the number of people with savings is increasing -- 55% of U.S. adults have more emergency savings than credit card debt. 

However, only 44% of U.S. adults would be able to pay an emergency expense of $1,000 or more from their savings and 66% would not be able to cover a month's living expenses if they lost their job tomorrow.

Many say inflation is causing them to save less for unexpected expenses. 

>> Check out our On-Demand module: Savings Tools & Strategies

About the Author

Hannah Rael

As NGPF's Marketing Communications Manager, Hannah (she/her) helps spread the word about NGPF's mission to improve the financial lives of the next generation of Americans.