Developments Concerning the Applicability of State Medicaid Lien Statutes

February 15, 2014 | Roger McEowen

Medicaid is the joint federal/state program that pays for long-term health care in a nursing home. A Medicaid recipient must meet numerous eligibility requirements but, in short, must have a very minimal level of income and assets.  State law typically allows the state Medicaid agency to file a claim in a deceased Medicaid recipient’s estate to recoup Medicaid benefits paid during the recipient’s lifetime, and also authorizes a statutory lien to the extent of Medicaid benefits paid. Under Iowa law, for example, the lien applies to all monetary claims which the Medicaid recipient may have against third parties (Iowa Code §249A.6). But, while federal law authorizes such state liens on monetary claims the Medicaid recipient may have, it bars placing a lien on a Medicaid recipient’s property (42 U.S.C. §1396k(a)(1)). The state agency must take reasonable steps to determine the legal liability of third parties to pay for the medical care of the Medicaid recipient, and the lien attaches to that obligation. But, a question has existed as to whether a state’s lien is limited to just those portions of any payments a Medicaid recipient is entitled to that are designated as being for medical expenses, or whether the lien applies to all third party payments a recipient is entitled to the extent of Medicaid benefits paid.  In 2006, the U.S. Supreme Court answered that question,and in 2013, the U.S. Supreme Court again held the same way. Other courts have also decided similar cases with some interesting outcomes.

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