**Iowa’s Medicaid Estate Recovery: A Controversial Practice Highlighted by Recent Cases**
Collection agents in Iowa are under scrutiny for aggressively pursuing estate recovery from the families of individuals with disabilities who passed away after long-term institutional care at facilities like the Glenwood Resource Center, which closed in the summer. The debts in question often result from Medicaid expenditures on care, with amounts frequently soaring into the millions.
The practice, known as Medicaid estate recovery, is mandated by federal law, which compels states to attempt to recover costs incurred by Medicaid on behalf of certain beneficiaries upon their death. While this is intended to encourage individuals to utilize their own financial resources before tapping into government aid, states like Iowa have garnered a reputation for being particularly relentless in their collection efforts.
Joy Higgins was taken aback when she received a letter shortly after the death of her daughter, Kristin, aged 41, last May. The correspondence, on Iowa Department of Health and Human Services letterhead, offered condolences but also demanded a staggering $4,263,148.67, claiming it was owed to Medicaid. Joy found it hard to fathom the rationale behind sending such a bill to a grieving family, given that Kristin’s limited income, due to a severe developmental disability, primarily went towards her long-term care. Despite having just $50 a month for personal expenses and a personal account balance of merely $2,239.84 at her passing—which was used for her funeral expenses—Joy felt the letter was an unnecessary and harsh reminder of their loss.
The experience is not unique. The Tomlyn family faced a similar shock after the death of their son Eric, aged 29, with a bill exceeding $4.2 million following his death in 2020. Susan Tomlyn described her disbelief upon receiving the letter, a situation that left her feeling overwhelmed and distressed.
Proponents of estate recovery argue that this strategy incentivizes individuals to fund their own care before resorting to Medicaid, which serves those with limited financial means. However, critics contend that such measures largely target families who possess minimal resources, while individuals from wealthier backgrounds often employ legal means to avoid these collections.
Many people think the letters, sent through contractors to recover Medicaid debts, are from state officials due to the official stationery used. In fact, companies like Sumo Group manage the messaging, despite the tone suggesting otherwise. Alex Murphy, a spokesperson for the Iowa Department of Health and Human Services, clarified that these letters are routinely dispatched after the passing of Iowa Medicaid recipients aged 55 or older or those who lived in long-term care facilities.
In the fiscal year ending last June, Iowa’s Medicaid estate recovery program reportedly recouped $40.2 million, showing an increase from previous years; however, nearly two-thirds of cases did not yield any collection. The average recovery amount was around $10,000, and only a small number of families were granted hardship waivers due to financial distress.
Nationally, Medicaid estate recovery is a contentious topic, with estimates indicating states reclaim over $700 million annually. Some families find themselves forced to sell their homes or deplete their savings due to recovery demands, which are often perceived as an unfair burden on those with little financial standing.
As calls for reform intensify, key legislative figures, including Rep. Jan Schakowsky, have sought to eliminate the federal requirement for states to reclaim Medicaid expenses from deceased beneficiaries’ estates. While efforts to curtail this practice have seen some traction in certain states, opposition remains, especially in light of broader discussions surrounding Medicaid funding and reform.
The implications of these collection efforts extend beyond financial burden to emotional distress for grieving families. Many advocates argue that the current system is not only flawed but serves to create additional hardships for those already facing significant challenges following the death of a loved one.
