Some Shocked By Estate Claims After Signing Up With MNsure

Feb. 14--WILLOW RIVER -- Scott Killerud was about to throw away a mailing about the 2016 enrollment period for MNsure last November when something caught his eye.

"Just as I was going to drop it in the trash, I was like -- wait a second. What did I just read?" the Pine County farmer said.

What caught his eye was a notification that if you're 55 or older and on Medical Assistance -- Minnesota's version of Medicaid -- the state places an estate claim with which to recover its costs after you and your spouse have died.

Killerud was younger than 55, but his wife, Ellen, had reached that age the previous September. The couple, who supplement their farm income with part-time jobs, were told when they signed up for insurance through MNsure in 2014 that their income level qualified them for Medical Assistance.

But they didn't know about the estate claim until Scott saw that mailing.

"I thought, 'Can this really be?' " Scott Killerud said, as he and Ellen sat with a reporter around the dining room table in their modest home east of Interstate 35 and south of Willow River. "And then I did some research online, and I made some phone calls, and I found out that was, in fact, the case."

The fact, he discovered, was that Ellen's "free" coverage had, in a little more than a year, run up a future bill of about $11,000 against their estate.

The Killeruds were startled.

"We don't carry any debt," Scott said. "We don't have credit card debt; we don't have a mortgage. We're just not that mentality of having something owed. It's something we're very uncomfortable with.

"In finding this out, it's really blindsided us."

More than $30,000

The Killeruds aren't alone. At least two other Pine County couples say they were taken by surprise to discover -- late last year or early this year -- that the Medical Assistance they had been signed up for through MNsure may be paid by their children in the form of liens.

Officials with the Minnesota Department of Human Services say there's nothing new here: Although the state may provide free or low-cost medical care to qualifying residents while they are alive, liens long have been used to recover some or all of those Medicaid costs after those recipients die. And, they say, anyone who applies for the program ought to be aware of it.

"We're certainly very sympathetic to folks who are not aware of how the program works," said Nathan Moracco, assistant commissioner for the DHS. "But, as part of the application process, this information is in there."

But the Killeruds, along with Rick and Rose Rayburn and Robert and Julie Gelle, also of Pine County, said they never saw that information.

They never saw themselves as needing free health insurance, the couples say. They were just looking for affordable insurance and to comply with the law requiring everyone to have insurance under the Affordable Care Act. But they weren't given options.

"You don't have a choice," Scott Killerud said. "If you qualify off the website ... whatever it is you qualify for is what you must buy if you're going to play the game."

The Rayburns, both of whom are older than 55, accumulated more than $30,000 in estate claims before pulling out of Medical Assistance when they found out about it. The Gelles found out in January that their estate ran up a future lien of more than $15,000 against it in 2015. They also canceled.

State Sen. Tony Lourey, DFL-Kerrick, said the process lacked transparency.

"It is there in the fine print, but not anywhere near to the level that I think is acceptable," Lourey said.

Medicaid expanded

The couples are caught in circumstances that extend from implementation of the Affordable Care Act. Minnesota agreed to expand its Medicaid program by extending eligibility to people with incomes up to 138 percent of the federal poverty line, and the asset test also was eliminated, Lourey said. In the past, a property owner's land and home could make them ineligible for Medical Assistance, but that no longer was the case. Suddenly, more people -- including those with low incomes but who had other assets such as homes -- qualified for the program.

At the same time, people were drawn to MNsure with the hope that the state agency would be the bridge to more affordable health insurance.

But while the asset test was no longer used to determine eligibility, a Medical Assistance recipient's assets remained subject to estate claims.

In late 2013, Rose Rayburn signed up for MNsure with help from Yvonne Skelton, an insurance broker with -- and now the owner of -- Davidson Insurance in Moose Lake. There was no paperwork, just a computer screen, said Rick Rayburn, who doesn't have a computer at home. The only thing that arrived later, he said, was a notice saying they were enrolled in Medical Assistance.

"I don't expect an estate lien because I'm trying to get insurance," he said.

Skelton, who no longer handles applications through MNsure, said she had been left in the dark about the process. The MNsure training, she said, covered things she already knew as a broker.

"We were being tested on, 'Do you know what a deductible is? Do you know what a co-payment is,' " she said. "I thought this was just kind of a joke."

The estate claim provision, Skelton said, "should have been a bright, bold piece of paper you have to sign that you're agreeing to it."

As it was, the Rayburns didn't find out until November, when their longtime friend Scott Killerud called them. The Gelles didn't find out until January, when Julie noticed a letter about the situation that Rick Rayburn had posted in the local laundromat.

Farm families

The Killeruds live at the end of a county road on what people might picture when they think of a typical hobby farm. Cattle graze docilely on a pile of hay in a feedlot across the lane from their home. Although Ellen's part-time job for the Willow River schools produces a predictable income, the rest is variable. It can take a sudden bump if they sell cattle or hay, and it can vary depending on how often Pine County needs to call on Scott's services as a road grader and snow plow operator.

"Last year it was hay; we sold almost $10,000 worth of hay since fall," he said. "And (state officials) don't seem to understand that our income is very variable."

Although they weren't given an option other than Medical Assistance, the Killeruds don't think of themselves as people who can't afford a premium for their health insurance, Scott said.

"I never considered ourselves destitute," he said. "You can look around. I don't feel that we have an air of destitution about us."

The Killeruds are gracious and low-key; Scott expressed mild surprise that a reporter was interested in their story.

Rick Rayburn, on the other hand, is fired up, contacting anyone he can think of to call attention to the situation.

The Rayburns live several miles west of I-35, as far off the grid and perhaps as close to self-sufficient as anyone could be in 21st-century Minnesota. They've patched together 100 acres of property accessed by the kind of narrow, twisting, hilly lane for which four-wheel drive was intended.

The house, which blends with the woods around it, started as a hunting shack on a knoll overlooking the land. Rick gradually added rooms, using hand tools and lumber from trees on the land. He added a barn on lower ground.

The house, which has no electricity and no running water, is filled with produce from the farm's gardens. Bags of onions hang from the rafters in a side room. Squash and pumpkins line a wall, kept fresh in the comfortably cool interior. They not only bake their own bread; they grow the grain with which to bake.

Rick works five days out of 14 as a truck driver, earning about $30,000 a year, he said. That's enough to support the lifestyle they've chosen.

As Rose produced a plate full of chocolate chip cookies, freshly baked in the wood-fired oven, Rick settled in at the rough-hewn kitchen table with a manila envelope filled with forms and letters.

From age 18, Rick always had health insurance from Blue Cross Blue Shield, he said. He always chose a high-deductible, catastrophic plan, and that's what he hoped for when the couple signed up with MNsure in 2013.

"We don't have a medical history," he said. "We didn't need the health care. What we needed was asset protection. ... If we had a catastrophic illness, it would protect our home from being absorbed by the hospital."

No health insurance

Had he known that being signed up with Medical Assistance meant estate claims, he never would have accepted it, Rick said. As soon as he learned about it, he canceled the plan, and he and Rose now have no health insurance. He will pay the tax penalty for that next year, he said.

"Prior to the Affordable Care Act, we had an intact estate," he said. "We had asset protection because of our major medical. ... And now we have a compromised estate, no asset protection and no health insurance."

Ironically, had the Rayburns' income been a little higher, they would have been bumped up into MinnesotaCare, with low premiums and no estate claims.

That's what happened to the Killeruds when their income increased in 2015, Scott said. Their new plan with MinnesotaCare, he said, was almost laughably affordable.

They paid $74 a month between the two of them for the premium, he said.

"There's a $5 co-pay if we need to go to the emergency room for a non-emergency situation," Scott said. "Five-dollar co-pay? C'mon, that's crazy. It should be $500 co-pay. We are not averse to paying premiums, but the system is so silly.

"You're either destitute, in their eyes, or you're just above destitute, but you can pay a $74 monthly premium."

But when he checked in November, Scott found out that the claim for Ellen's coverage had continued to accumulate even after they were bumped up to MinnesotaCare. In effect, he said, they were being double-billed.

The Rayburns also had an increase in income last year and were $5,000 over the Medical Assistance cap, Rick said. They should have been bumped up to MinnesotaCare but weren't.

"We gave them our last two pay stubs; we gave them exactly what they asked for in order to judge where we belonged, and we had no idea what the limits were," he said. "They just put us in Medical Assistance."

Meanwhile, the Gelles, of rural Sandstone, started out with MinnesotaCare but were transferred to Medical Assistance in 2015. It makes Rick Rayburn suspicious.

"It appears that this checking your income only works one-directionally," he said. "Whichever way they can make money."

Separate programs

The Rayburns said they were never given an option for any plan other than Medical Assistance.

Could Minnesotans simply choose MinnesotaCare, even if they qualify for Medical Assistance?

No, Moracco said.

"Can they buy up? No," he said. "They are still very separately defined in law. You qualify for one and only one program. ... It's not as simple as buying a different kind of car. It's really an entirely different vehicle."

When the debt-averse Killeruds learned about the estate claim, they tried to pay it off.

"Last week when I was in Pine City, I offered to write a check," Scott said. "Ellen's liens total $11,000. I wanted to write a check for $11,000 and get this stuff behind us. And they said, 'We don't have provision to take your money.' There's no way -- that doesn't happen."

"How can you not pay a bill?" Ellen added.

But there's no bill to pay, Moracco said.

"There's nothing to pay off while somebody is living, so there isn't a lien, per se, to pay," he said.

There is no lien until the property owner and his or her spouse have died, Moracco said. "During their lifetime, they can do anything they want with their assets."

The Rayburns, the Killeruds and the Gelles all canceled their plans acquired through MNsure as soon as they found out about their outstanding future liens.

Scott Killerud said that after spending hours on hold with MNsure, he was able to close both their Medical Assistance and MinnesotaCare accounts. Then he used the MNsure site to find the cheapest private insurance plan he could find -- a $333 premium with a $15,000 deductible.

"We just sent them a check, our first premium, and we haven't gotten any paperwork back regarding that, so I hope it's legit."

The Gelles are paying $214 a month for supplemental coverage for Robert, who turned 65 last year. Julie doesn't have health insurance. She no longer trusts anyone, she said.

Rick Rayburn said he and Rose still would qualify for MinnesotaCare, but he doesn't want to chance it.

"Since I have no idea what they're going to put me on, I'm not going to do this again," he said.

'It's a trap'

But like Moracco, MNsure's spokesman said the information was available in the first place.

"The possibility of the state making a claim of repayment is included in both the paper and online versions of the MNsure application as MNsure is the single front door for all of Minnesota's health insurance programs," Shane Delaney wrote in an email. "Applicants must agree that they understand this specific provision before submitting their application."

But the Gelles, Rayburns and Killeruds say they never saw such information, nor were they informed of it.

"It's a trap, basically," Julie Gelle said. "They didn't disclose anything up front."

Rick Rayburn said he called Lakes & Pines Community Action Council, which includes Pine County in its territory, about the Medical Assistance lien provision.

"When I called them up and I said, 'Are you informing people 55-65 that there is an estate lien clause?' She said, 'I don't know anything about that,' " he said.

Dawn Beseman, community services program manager for Lakes & Pines, said the agency's navigators are aware of and trained about the claims -- now. "I don't know the specifics of when we were all trained on that," she said.

But that's not the navigators' responsibility anyway, Moracco said.

"The navigator's job is to help folks get enrolled," he said. "It's not their role to explain all the provisions."

Delaney said navigators aren't specifically trained about the estate claim provision but are well-equipped to guide people through the MNsure process.

"Navigators are trained to walk through all aspects of the application with a consumer, including the final attestations at the end of the application where this provision is mentioned and must be agreed to," he wrote.

'Taken unawares'

Moracco said the process has been made more explicit since the first year when the Gelles, Killeruds and Rayburns signed up. Now, he said, "people who are applying for coverage can't skip through a paragraph. They have to check a box to indicate ... they're aware about this condition."

Lourey said there's still room for improvement. And the notice given in the past wasn't nearly sufficient, he said.

"I think the notice was not a notice of enough significance to really make people aware that this would take effect," he said. "The people that I've talked to were legitimately taken unawares. That's not how any of us intend to do business."

Lourey is working on legislation that would remove the estate claim provision for people using Medical Assistance for health care, he said. (It would not change the estate claim to recover the cost of long-term care, such as in nursing homes.) He also wants to legislatively remove the claims that were placed in 2014 and 2015, he said.

"Even if there is a cost, I'm going to be pushing to try to accomplish this," he said. "I'm hopeful that the cost assigned to this would be minimal."

It's up to the Legislature if they want to change policies, Moracco said. But there's a reason behind the estate recovery provision, he added.

"The general idea here is that people with assets should help contribute to the cost of their coverage," Moracco said. "Many have incurred thousands of dollars of medical expenses at taxpayer expense. That's the reason for these recoveries. It's not intended to be punitive."

'We're healthy people'

It happens that none of the people quoted in this story had significant medical expenses while being covered by Medical Assistance.

"I had absolutely nothing," Julie Gelle said. "I did not go to the doctor. My husband had one diabetic checkup, and he had fluid removed from one ear."

Ellen Killerud hasn't seen a doctor since 2006, she said. Scott Killerud goes in for a physical once a year, he said -- when he has health insurance.

The Rayburns had a couple of doctor visits, Rick said, and he had a cataract procedure done.

When Scott Killerud first told him about the estate claim, he assumed it only would be to cover the medical costs incurred.

"So I'm thinking, 'Eight thousand bucks,' " he said. "So Rose says, 'You better be sitting down, because my half is $14,000.' Now your brains are frying. You're going, 'You gotta be kidding me.' "

They take care of themselves so they don't require a great deal of medical care, Rick said. "We're healthy people, and we eat right and we exercise."

But people should keep in mind what the program has accomplished, Moracco said.

"What we know is that we have more coverage than ever in the state of Minnesota," he said. "It's something in the 96 percent coverage rate."

The three-tiered system is designed so that low-income Minnesotans can be placed on Medical Assistance, the working poor on MinnesotaCare and those who make more money but still need some help can get tax credits along with health insurance from the marketplace, Moracco said.

But people like the Killeruds and the Rayburns don't fit into that system, Scott Killerud said.

"I don't want to be beholden to anyone," he said. "I want to pay this stuff off, at least the legitimate amounts. I'd prefer not to pay anything. I'm sure in some place in that website there's probably a bot or something that says you couldn't possibly have gotten on to Medical Assistance without acknowledging it somehow.

"I don't believe it happened. ... But if they say it happened, we just want to pay it off."

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