Facing death, Duluth woman discovers Medicaid services bill comes due posthumously

DULUTH — Victoria Volz spent 14 years devoting what money she had, and daily hours in the dirt, to her old, three-bedroom home and its carefully-tended flower gardens in Duluth’s East Hillside neighborhood. She hoped to “leave a mark” after her death by donating the property to her temple.

Now Volz, 67, is facing surgery with a 50/50 survival rate. While working on her will, she received a shock: The government likely will use her home to recover Medical Assistance costs if she dies.

She has long relied on Medical Assistance disability services to help her stay in her home and said St. Louis County workers repeatedly assured her a bill would never come due and wouldn’t affect her house. She understood that to mean never, ever.

But federal and state laws require the Minnesota Department of Human Services (DHS) and local agencies to recover costs from certain people receiving Medical Assistance — Minnesota’s Medicaid program — after they die. The requirement generally applies to those 55 or older with disabilities or health conditions who receive long-term services to live in the community, as well as people of any age permanently living in a medical institution, like a nursing home.

“I’m just watching everything evaporate,” Volz said of her vision for her property. “I wonder how many people don’t know about this?”

The estate recovery process became federal law in 1993. It has faced pushback in recent years, stemming in part from a federal report that explored how the burden often falls on low-income people and can disproportionally affect people of color, perpetuating intergenerational poverty. Earlier this year, a bill was introduced in Congress to repeal the mandate that states must go after repayment of Medicaid long-term care services. This month, Massachusetts altered its recovery process to try to preserve more generational wealth.

“Ideally the hard work and the savings of that generation would be able to be passed off to a successive generation to give them a leg up,” said Eric Carlson, a directing attorney at the national organization Justice in Aging. “But the way that estate recovery programs play out, too often you just yank the value back to the Medicaid program and leave the children and grandchildren with no head start at all.”

People often are surprised to find the government is trying to claw back money, said Minnesota elder law attorney Laura Zdychnec. After a parent’s death, adult children can be caught off guard by an intimidating letter in the mail, she said.

The Minnesota Star Tribune reviewed several such letters sent by Minnesota counties. The counties write that there is a claim against a deceased person’s assets because they received Medical Assistance and warn the family member that they could face legal action if they don’t provide asset information to the county.

The state collected $61 million in the last fiscal year through estate recovery and liens, a number that has climbed from $36 million in 2020. Collections remain a small fraction of the billions of dollars Minnesota distributes for long-term support services.

“We, in Minnesota, have pretty generous long-term care Medicaid benefits and we allow people to retain a lot of things that make their lives better during their lifetime,” said DHS’s Medicaid Recovery Manager Geneva Finn.

In states with less expansive benefits, she said people run up debts and lose their homes during their life. The state only collects the minimum of what’s federally required, she said, and the money goes into the Medicaid budget. Finn said estate recovery also “puts some brakes” on people who shouldn’t qualify for services intended for low-income Minnesotans from trying to get taxpayers to pay for their care.

“This isn’t meant to be punitive,” Finn said, adding that they hear from more people who are happy the estate recovery process exists so they can give back to a program that helped them during their lifetime. “You are paying it forward to other people who might need that care in the future.”

Volz said paying it forward was her goal for donating her home, which she estimates to be worth about $200,000. She wanted the money to benefit Temple Israel in Duluth and hoped the next owner might carry on her love of gardening.

Her white house sits on a busy street not far from Lake Superior. She has limited mobility and enjoys the frequent passers-by, some of whom comment on the sea of blooms she’s packed into her tiny yard.

“If there’s dirt, there’s flowers,” said Volz, whose gardens have been featured in the Duluth News Tribune.

Flowers show up inside, too, with forget-me-nots on hallway wallpaper and roses on curtains. Last week, jewelry, décor and other odds and ends were stacked around the home as she prepared for a “fire sale” to clear some belongings ahead of her looming surgery. In the next month, she expects to undergo an unusual procedure at the University of Minnesota. Volz said her diaphragm has effectively “disintegrated” and her stomach is pressed against her heart and lungs, making it difficult to breathe.

It’s the latest in a lifetime of bad luck, said Volz, who has struggled with depression and spine, hand and ankle injuries. She receives a Community Access for Disability Inclusion waiver, one of many federally funded waiver programs the state uses to support people with disabilities, older adults, those with brain injuries and the chronically ill and medically fragile.

Her waiver covers a range of services, including occasional nurse visits and 30 hours a week of help from a support professional, which can include everything from shopping for groceries to going up and down stairs with laundry. A document Volz received from St. Louis County breaking down her waiver costs includes $53,000 for a year of services from the personal care assistant company.

She likely owes roughly $600,000 for the years of services she’s received since turning 55, Volz’s attorney Malcolm Davy estimated.

Concerns about adequate notification are not new. In 2016, state officials worked on improving notification of the cost recovery process after several people in the Pine County area said they didn’t know about the clawback provision.

For people seeking Medical Assistance, the state’s application for long-term care services mentions the estate recovery process a couple of times, with details on Page 18. It notes the exceptions to estate recovery and liens. The state will delay the process if someone’s spouse still is living, though when they die it will try to get the money from the estate. Minnesota also will hold off on recouping costs if the person who died had a child who is younger than 21 or permanently disabled.

“Most people who are in that position, they are dealing with unbelievable stressors in their life,” said Zdychnec, the elder law attorney. “The last thing they are looking at is Page 18 of a 25-page application and grasping how important this is.”

The application information is more expansive than it used to be. Over the years, the state added a mention that the government may claim repayment among five bullet points of key things to know, which is on the page where someone must write their signature.

“How much bigger do we make it?” Finn asked. “We’re not trying to hide it. We want people to understand. We don’t want people to panic.”

When St. Louis County case managers send out applications for Medical Assistance services to people 65 and older, they include a DHS document explaining estate recovery and liens. An official said Thursday they now also will send that to applicants 55 and older — the age at which estate recovery starts to apply.

St. Louis County collected $2 million through the process over the last fiscal year. Assistant County Attorney Ben Stromberg said many factors, like the value and condition of the property and whether other outstanding claims exist, determine the approach to recouping costs from a home or cabin after someone’s death. He said they want to resolve the cases quickly so properties don’t sit empty.

“We are typically settling these for pennies on the dollar,” he said, noting that in 11 recent cases the amount recovered ranged from 2% to 92%.

Volz said she would have “flat-out refused any help” and found some alternative if she knew she wouldn’t be able to pass along her home after her death.

“There needs to be some kind of alarm,” she said, adding she wants more training for county staff who work with vulnerable adults to explain the estate recovery process and ensure the adults understand. “I asked the right questions, but I didn’t question the answers.”

Staff photographer Leila Navidi contributed to this report.