Little-Known Fact: Medicaid Benefits May Actually Be A Loan

by Caila Smith
Originally Published: 
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Government-funded insurance like Medicaid is supposed to be accessible to those in the lower-to middle-class who qualify. Whether it’s needed temporarily to allow a struggling individual or family to get back on their feet, or if it’s coverage used permanently for the elderly and those with disabilities preventing them from working, Medicaid is supposed to help lighten an American’s load without worry. But as it turns out, there might be a cause for concern from receiving Medicaid insurance coverage after all.

Through the Medicaid Estate Recovery Law signed in 1993, Medicaid is required to seek repayment of medical debts. And in doing so, it’s costing people their homes and other assets after death. In many cases, it also results in surviving family members being displaced.

Rachel Corbett, a journalist, was a firsthand witness to the added “insult to injury” affect of this law when she met with 62-year-old Tawanda Rhodes whose days are limited in the home she inherited from her late parents.

According to Corbett’s account published in the Atlantic, Rhodes’ father passed away believing his surviving family would be secure with the family home and assets inherited, as his life insurance payout covered the remaining mortgage on his family home. But not long after, Rhodes’ mother, Edna, became ill with Alzheimer’s disease, and Rhodes discovered the hell that is the “fine print” of Medicaid insurance.

As Edna’s disease progressed, she began to require long-term, professional care that could only be appropriately rendered in a nursing facility. To help with the medical expenses, a friend signed her up for Massachusetts’ Medicaid program, MassHealth.

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Merely weeks after Rhodes’ mother was situated in her nursing home, she began receiving letters telling her that her family’s (paid off) home — her inherited home — would be the government’s property until her mother’s medical debts were repaid.

She was told there was no reason for alarm by a MassHealth representative, but Rhodes took precautions, removed her mother from the facility and became the primary caregiver for her.

Soon after, Rhodes and her husband spent thousands of dollars on home renovations to make the house more comfortable and suitable for caregiving. And as if Rhodes and her family hadn’t already been through the wringer, Rhodes’ own husband began showing signs of Alzheimer’s disease and was later diagnosed with this condition as well, leaving her to not only manage extensive care for her mother, but now her husband too.

After two years of in-home, around-the-clock care, Edna died, and Medicaid didn’t waste a moment attempting to collect past-nursing home dues.

“Tawanda received a letter from the Massachusetts Office of Health and Human Services, which oversees MassHealth, notifying her that the state was seeking ‘reimbursement from [Edna’s] estate for Medicaid payments made on her behalf.’ For Edna’s five years on MassHealth, she owed $198,660.26,” Corbett wrote in the Atlantic.

Mere weeks after Rhodes’ mother was situated in her nursing home, she began receiving letters telling her that her father’s home — her inherited home — would be government property until her mother’s medical debts were repaid.

As it turns out, at least in Massachusetts, most homes sold to repay medical expenses do not put a dent in the amount owed to the state overall and today’s reality is that many two-income families are living in poverty.

“Estate recovery punishes working- and middle-class Americans who, despite the odds, have managed to scrape together a little something to pass on to their children,” Corbett wrote.

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Families who qualify for Medicaid or Medicare are usually those who live in constant fear about their financial situation. They are the working poor, living paycheck to paycheck. People are often stuck between a rock and a hard place — with little to no options for affordable private health insurance plans, and a state-funded Medicaid program that may actually take your home after you receive care.

Rhodes’ family home needs a new roof, but according to Corbett, she cannot find a bank to approve her for a loan due to the repayment Medicaid is seeking. “They got my hands locked where I can’t get any equity out of the home, so they figure, ‘It’s gonna fall, the roof is gonna blow one day, and she’s gonna have to get the hell out of there,'” she told the Atlantic.

But just because someone is among the millions of the working poor in this country does not mean they are undeserving of passing in peace, free of worry about the potential consequences that might haunt their family.

“For Edna’s five years on MassHealth, she owed $198,660.26,” Corbett wrote in the Atlantic.

Estate recovery isn’t well-known and it’s easy to miss when it’s written in the fine print of a Medicaid application that’s dozens of pages long. This feels an awful lot like further punishment and discrimination for being poor, and it’s shameful.

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