The bills are extraordinary examples of a practice called Medicaid estate recovery. Federal law requires states to try to collect money after some types of Medicaid recipients die. The point is to encourage people to use their own resources before relying on the public program. But some states, including Iowa, are particularly aggressive about the collections, national reports show.
Joy Higgins was stunned by a letter she received a few weeks after her 41-year-old daughter, Kristin, died last May. The letter was written on Iowa Department of Health and Human Services stationery. At the top, in bold letters, it said, “Re: Kristin Higgins.”
“Dear Joy Higgins,” the letter read. “Our sincere condolences to you, as we understand the above person is deceased.”
The letter explained that any money Kristin Higgins left behind would have to be remitted to the state to help repay Medicaid $4,263,148.67. Her family had 30 days to respond.
Joy Higgins, who lives in Council Bluffs, wonders why state debt collectors would send a massive bill to the family of someone like her daughter, who had little income because of a severe developmental disability stemming from a premature birth.
“What are they gaining? That’s my question. Except for kicking someone in the face right after they lost a loved one?” Higgins said.
Kristin Higgins’ only income was a Social Security disability benefit of $1,105 monthly. Most of that went directly to the state institution, where she lived for more than 30 years. Just $50 was set aside monthly as an allowance for personal expenses, according to a state ledger obtained by her family. “They knew exactly how much she had,” her mother said.
When she died, Kristin’s personal account had a balance of $2,239.84. The family put that money toward her funeral, an allowed expense. Nothing was left for the state to take. Higgins said receiving the letter was traumatic even though the family didn’t have to pay the Medicaid bill.
The Higginses have heard about similar attempts to collect from other families, including that of Eric Tomlyn, who died in 2020 at age 29 after spending most of his life at the Glenwood Resource Center.
Shortly after his death, the Tomlyn family received a Medicaid bill of more than $4.2 million. His mother, Susan Tomlyn, was shocked by the letter. “I was like, ‘What? What? Oh my God,’” she recalled.
She filled out a form explaining that the small balance in her son’s personal account had gone toward his funeral. “That’s the last I heard of it,” Tomlyn said.
Supporters of estate recovery efforts say the rules encourage people to pay for their own care before applying for Medicaid, which is mainly intended to help those with little money.
Critics of estate recovery programs say they often target families with little to give. Wealthier families tend to have lawyers who can structure estates in ways that avoid Medicaid repayment demands, the critics note.
Like Higgins, Tomlyn thought her Medicaid recovery bill came from state officials because it was printed on letterhead from the Iowa Department of Health and Human Services. The people who signed the letters identified themselves as being from the “Estate Recovery Program.” But the people who produce such letters work for private contractors hired to collect Medicaid debts, according to Alex Murphy, a spokesperson for the state agency. Their contract requires them to use state stationery.
Murphy said in an email to KFF Health News that such letters are sent after every death of an Iowa Medicaid recipient who was at least 55 years old or who lived in a long-term care facility. He said the letters “request information from family members regarding the deceased person’s assets and expenses,” and the letters note that repayments are expected only from the person’s estate.
Iowa’s Medicaid collections are handled by Sumo Group, a Des Moines company. Its director, Ben Chatman, declined to answer questions, including why the company sent bills to families of people with disabilities who lived most of their lives in state institutions. “I don’t do media relations,” Chatman said.
Sumo Group is a subcontractor of a national company, Gainwell Technologies, which has handled Medicaid collections for several states. In Iowa, the company is paid 11% of whatever it can collect from the estates of Medicaid participants. A spokesperson for Gainwell declined to comment.
Iowa’s Medicaid estate recovery program brought in $40.2 million in the fiscal year that ended last June, up nearly 14% from two years earlier, state records show. That total represents a sliver of the state’s total Medicaid budget, which is expected to hit $9 billion this year.
Nearly two-thirds of Iowa estate recovery cases wound up being closed with no collection of money last fiscal year, according to the state. In cases in which money was recouped, the average amount paid was about $10,000.
Thirty-five Iowa families were granted hardship waivers, which the state allows if an heir’s health or life would be endangered because payment of the Medicaid bill would deprive them of food, clothing, shelter, or medical care. Officials denied an additional 20 requests for hardship waivers.
A 2021 report to Congress estimated states collected more than $700 million annually from Medicaid participants’ estates. That money is shared with the federal government, which helps finance Medicaid. Some states claw back much less than others. Hawaii, for example, collected just $31,000 in 2019, the latest year analyzed in the federal report. Iowa, with about twice as many residents as Hawaii, raked back more than $26 million that year.
Americans aren’t subject to such clawbacks for using any other federal health program, including Medicare, which covers older people of all income levels.
The national group Justice in Aging has helped lead opposition to Medicaid estate recovery programs. Eric Carlson, a California attorney for the group, said the issue usually comes into play after the death of a person who had nursing home care covered by Medicaid. Recovery demands often force survivors to sell homes that are their families’ main form of wealth, he said.
Carlson said he hadn’t previously heard of Medicaid estate recovery bills topping $4 million, like the ones sent to survivors of the two Iowans with disabilities.
He wondered why debt collectors would pursue such cases, which are unlikely to yield any money but could cause anxiety for families. “Of course, if you open up a piece of mail that says you owe millions of dollars, you’re going to think the worst,” he said.
Carlson said he would advise anyone who receives such a letter to respond to it with documentation showing that their loved one’s estate can’t repay a Medicaid debt. “It’s never a good idea to ignore it,” he said. Failure to respond to the bill could lead to continued collection efforts, which could threaten a family member’s finances or property, he said.
Some states have reined in their Medicaid clawback efforts. For example, Massachusetts legislators last year voted to drastically limit their program. This was the second time Massachusetts reduced its Medicaid estate recovery effort, which once was one of the most aggressive in the U.S.
Critics in Congress have also tried to limit the practice.
Rep. Jan Schakowsky (D-Ill.) has twice introduced bills to eliminate the federal requirement that states claw back Medicaid spending from recipients’ estates. Last year’s bill gained 47 Democratic co-sponsors, but it received no support from the Republicans controlling the chamber, and there was no similar bill in the Senate. She plans to try again this year, even though her party remains in the minority.
Schakowsky said in an interview that she’d never heard of Medicaid estate recovery demands reaching millions of dollars, as the Iowa families faced. But demands for hundreds of thousands of dollars are common. For many families, “that’s still impossible” to meet, she said.
Schakowsky hopes that members of Congress from both parties will agree to curtail the program once they realize how much angst it causes their constituents and how relatively little money it returns to the government. “The whole program is ridiculous,” she said.
Her quest could become even tougher if the Trump administration moves ahead with proposals to trim Medicaid spending.
The office of Sen. Chuck Grassley, who is the senior member of Iowa’s all-Republican congressional delegation and has taken leading roles in many health policy debates, declined to comment on the issue.
The Iowa Department of Health and Human Services said it notifies families about the estate recovery process when they apply for Medicaid. Joy Higgins said she doesn’t recall seeing such a notice.
The institution where Kristin Higgins spent most of her life was closed last year after federal officials investigated complaints of poor medical care. But Joy Higgins said her daughter was treated well there overall. “If I had millions in the bank, I’d give it to the state,” she said. “I would. It was worth it.”
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