Variations in implementation of federal recovery options:
States can choose to implement the minimal estate recovery guidelines mandated by OBRA 93, or they can implement a variety of options permitted by federal law to expand their estate recovery activities to reach more people and include more types of assets (see Table 4, below). For example, they can: use liens to secure Medicaid's right to recover; recover from recipient assets that bypass probate; or recover Medicaid spending for additional services beyond the required minimum of long-term care and related services.
There appears to be only a weak connection between a state's reported collections and the policy options it has chosen. Although states that exercise the fewest estate recovery policy options (e.g., Arkansas, Mississippi, New Mexico, North Carolina, Pennsylvania, Vermont, and West Virginia) tend to have the lowest rates of collection, some states have relatively low collection rates (e.g., Delaware or Oklahoma), despite having chosen a broad range of options to maximize collection opportunities. Clearly, factors other than a state's chosen policy options are also at work.
Other state policy choices:
States have broad flexibility to exempt assets from Medicaid estate recovery (for example, they might exclude certain types of real property or an amount to allow for burial of the deceased Medicaid recipient), reducing, possibly substantially, the amount of assets remaining for the state to recover.7
Effect of Federal Medicaid Matching Percentage (FMAP) rate:8
A state's estate recovery program might also be influenced by how much of the total amount recovered represents federal match and, therefore, must be returned to the Federal Government. Some observers speculate that states with the highest FMAPs receive the greater share of their Medicaid funding from the Federal Government and, therefore, may have the least incentive to pursue recoveries when the lion's share of the monies recovered must be returned to the Federal Government. However, there does not appear to be a direct relationship between FMAPs and collection rates. States with high FMAPs do not necessarily have poor collection rates, and low FMAP states do not always recover the most.
Individual state political considerations:
Estate recovery engenders considerable political controversy and resistance in some regions of the country, which can compromise collaboration between Medicaid estate recovery programs and state legislatures and executive officials to implement effective policies and procedures.9
Interaction of Medicaid with other state laws:
Effective Medicaid estate recovery requires coordination and compatibility with state probate laws and procedures. For example, some states put certain homestead property beyond the reach of Medicaid estate recovery or other claimants against the estates of deceased persons.10
An effective estate recovery program requires a commitment by the state to provide adequate administrative resources, such as integrated information systems and/or trained staff.
Actions taken by individuals to shelter their estates:
The more individuals in a state engaged in estate planning before death to protect their assets for heirs, ensure an income stream from retirement savings during life, or avoid inheritance taxes after death, the more they reduce the portion of their estate subject to recovery by claimants (including Medicaid) after their death.