New Act Stops States from Seizing Homes to Recover Correctly Paid Medicaid Costs

The Stop Unfair Medicaid Recoveries Act is short, direct, and has a massive impact for anyone who might rely on Medicaid, especially as they age. Simply put, this legislation ends the practice of state governments recovering the cost of correctly paid Medicaid benefits by placing liens on a person’s home or going after their estate after they pass away. Think of it as a protective shield for your family’s assets when dealing with long-term care costs.

The End of Estate Recovery

Under current law, states are often required (or allowed) to try and recover Medicaid costs from a recipient’s estate—a process known as estate recovery. This bill changes Section 1917 of the Social Security Act to prohibit states from starting or continuing any action to collect correctly paid Medicaid benefits from an individual’s estate. If you’ve ever worried that using Medicaid for necessary care meant your kids would lose the family home when you were gone, this provision (SEC. 2) is designed to eliminate that fear.

Protecting the Family Home

Beyond estate recovery, the bill explicitly bans states from imposing new liens on an individual’s home for correctly paid Medicaid benefits. A lien is essentially a claim against a property, making it nearly impossible to sell or transfer without paying the state back first. The bill doesn't just stop new liens; it requires states to actively withdraw any existing liens related to these recoveries within 90 days of the law being enacted. They also have to notify the individual or their legal representative that the lien is gone. This means that if a state had already placed a claim on your house because you or a loved one received Medicaid services, that claim must be dropped quickly.

What This Means for Real Life

For most people, the biggest financial asset they own is their home. Medicaid is vital for many seniors and disabled individuals, particularly those needing expensive long-term care. This bill treats Medicaid like the insurance program it’s supposed to be—not a loan that needs to be repaid by selling off the assets of the deceased. Consider an average middle-class family: a parent needs nursing home care covered by Medicaid, and the state places a lien on their modest house. Without this bill, that house would likely have to be sold to reimburse the state. With this bill, the house is protected, giving the family a much-needed safety net and preserving generational wealth.

The Cost to the States

While this is a clear win for Medicaid recipients and their families, it’s worth noting the practical impact on state governments. States currently rely on estate recovery to recoup some of the costs of the Medicaid program. This bill removes that revenue stream, which could create a minor administrative challenge for state Medicaid programs. However, many studies suggest that the actual revenue recovered often represents a small fraction of the total Medicaid budget, and the administrative costs of pursuing those recoveries can be high. The bill effectively prioritizes the financial security of vulnerable citizens over marginal state revenue, requiring states to focus on the core mission of providing care rather than acting as a collection agency.