PERRY, Iowa \u2014 Fran Ruhl\u2019s family received a startling letter from the Iowa Department of Human Services four weeks after she died in January 2022.<\/p>\n

\u201cDear FAMILY OF FRANCES RUHL,\u201d the letter began. \u201cWe have been informed of the death of the above person, and we wish to express our sincere condolences.\u201d<\/p>\n

The letter got right to the point: Iowa\u2019s Medicaid program had spent $226,611.35 for Ruhl\u2019s health care, and the government was entitled to recoup that money from her estate, including nearly any assets she owned or had a share in. If a spouse or disabled child survived Ruhl, the collection could be delayed until after their death, but the money would still be owed.<\/p>\n

The notice said the family had 30 days to respond.<\/p>\n

\u201cI said, \u2018What is this letter for? What is this?\u2019\u201d said Ruhl\u2019s daughter, Jen Coghlan.<\/p>\n

It seemed bogus, but it was real. Federal law requires all states to have \u201cestate recovery programs,\u201d which seek reimbursements for spending under Medicaid, the joint federal and state health insurance program for people with low incomes or disabilities. The recovery efforts collect more than $700 million a year, according to a 2021 report<\/a> from the Medicaid and CHIP Payment and Access Commission, or MACPAC, an agency that advises Congress.<\/p>\n

States have leeway to decide whom to bill and what type of assets to target. Some states collect very little. For example, Hawaii\u2019s Medicaid estate recovery program collected just $31,000 in 2019, according to the federal report.<\/p>\n

Iowa, whose population is about twice Hawaii\u2019s, recovered more than $26 million that year, the report said.<\/p>\n

Iowa uses a private contractor to recoup money spent on Medicaid coverage for any participant who was 55 or older or was a resident of a long-term care facility when they died. Even if an Iowan used few health services, the government can bill their estate for what Medicaid spent on premiums for coverage from private insurers known as managed-care organizations.<\/p>\n

Supporters say the clawback efforts help ensure people with significant wealth don\u2019t take advantage of Medicaid, a program that spends more than $700 billion a year nationally.<\/p>\n

Critics say families with resources, including lawyers, often find ways to shield their assets years ahead of time \u2014 leaving other families to bear the brunt of estate recoveries. For many, the family home is the most valuable asset, and heirs wind up selling it to settle the Medicaid bill.<\/p>\n

For the Ruhl family, that would be an 832-square-foot, steel-sided house that Fran Ruhl and her husband, Henry, bought in 1964. It\u2019s in a modest neighborhood in Perry, a central Iowa town of 8,000 people. The county tax assessor estimates it\u2019s worth $81,470.<\/p>\n

Henry Ruhl, 83, wanted to leave the house to Coghlan, but since his wife was a joint owner, the Medicaid recovery program could claim half the value after his death.<\/p>\n

Fran Ruhl, a retired child care worker, was diagnosed with Lewy body dementia, a debilitating brain disorder. Instead of placing her in a nursing home, the family cared for her at home. A case manager from the Area Agency on Aging suggested in 2014 they look into the state\u2019s \u201cElderly Waiver\u201d program to help pay expenses that weren\u2019t covered by Medicare and Tricare, the military insurance Henry Ruhl earned during his Iowa National Guard career.<\/p>\n

Coghlan still has paperwork the family filled out. The form said the application was for people who wanted to get \u201cTitle 19 or Medicaid,\u201d but then listed \u201cother programs within the Medical Assistance Program,\u201d including Elderly Waiver, which the form explained \u201chelps keep people at home and not in a nursing home.\u201d<\/p>\n

Coghlan said the family didn\u2019t realize the program was an offshoot of Medicaid, and the paperwork in her file did not clearly explain the government might seek reimbursement for properly paid benefits.<\/p>\n

Some of the Medicaid money went to Coghlan for helping care for her mother. She paid income taxes on those wages, and she said she likely would have declined to accept the money if she\u2019d known the government would try to scoop it back after her mother died.<\/p>\n

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\n\t\t\t\t\t\t\tHenry keeps the ashes of his wife, Fran, in an urn on a side table in the home they shared for nearly 60 years. After he dies, the family will bury Henry and Fran together at the state veterans cemetery. \t\t\t\t\t\t(KC McGinnis for KHN)<\/span><\/figcaption><\/figure>\n<\/p><\/div>\n