The issues described in this blog post are explored more fully in a new NHeLP resource, The Red Tape Divide: How Medicaid Paperwork Burdens Hit Rural Communities Harder. In that paper, we describe gaps in access to Medicaid for rural residents, in particular Black rural residents, with particular attention to the unique characteristics of rural banking and property transfer in rural communities.
Medicaid is a vital lifeline for rural communities, covering nearly 1 in 4 people living in rural areas. But Medicaid enrollees living in rural areas face barriers to establishing their eligibility that are not as commonly faced by people in more “metropolitan” areas. One of these barriers is electronic asset verification. While electronic asset verification is a broadly successful modernization, it is structured in a way that can sometimes leave rural Medicaid applicants and enrollees buried in paperwork. This divide is especially apparent for Black Medicaid applicants and enrollees living in rural areas.
Rural Medicaid enrollees are at a disadvantage when it comes to red tape – residents of rural areas are disproportionately older and more likely to have a disability than residents of metro areas, meaning that they are more likely to qualify for Medicaid based on their age or disability status. People who qualify based on age or disability status are subject to asset tests and other paperwork-heavy eligibility requirements.
All states must verify assets electronically through an asset verification system (AVS), although states have adopted AVS to differing extents. AVS is generally beneficial because it electronically locates financial and property records, reducing the need for burdensome and time-consuming paperwork for certain Medicaid applicants and enrollees. But AVS has not fully eliminated the burden, nor is it structured in a way that allows rural populations to take advantage of its full benefits.
The Benefits of Rural Life Can Be the Same Qualities That Hinder Access to Medicaid
Some characteristics of rural life that many value can also complicate getting and keeping Medicaid for rural residents. For instance, although small community banks and credit unions are valued for their ability to uniquely serve those communities in a way that larger financial institutions often do not, they sometimes do not have the infrastructure to fulfill AVS requests to the same extent as those larger institutions. The utility of electronic asset verification is similarly limited for rural residents who do not use a bank or credit union at all, either by choice or due to a lack of access. Rural Medicaid applicants and enrollees can therefore sometimes be at a higher risk of increased burden in establishing their Medicaid eligibility, which, in turn, can increase the risk of an erroneous denial or termination.
Inheriting Property Can Be a Double-Edged Sword, Especially for Black Families
In some rural areas, property is often passed down within families without a will or clear title and jointly owned by generations of heirs and descendants. Property owned and transferred in this way is commonly called “heirs’ property,” although it can go by many other names, such as “family land” or “kinfolk property.” Heirs’ property is a form of joint real property ownership by multiple individuals that commonly happens when a person dies without a will or chooses to leave the property to all of their children or heirs. Owning property in this way is particularly common in rural Black communities across the southern United States, where it is the leading cause of Black land loss.
Heirs’ property can be a very unstable form of land ownership. For instance, the legal nature of such property ownership means that any partial owner of the land can force a sale at any point. The other owners must then either find a way to buy the entire parcel, or give up their partial interest in it – even if one or more of them are currently living on it. Predatory investors and real estate speculators have long manipulated this tactic to grab up Black-owned land, buying out a single heir and then forcing a sale to eject the other owners from the parcel. Heirs’ property is also particularly vulnerable to tax foreclosures: Families do not always arrange clear responsibility for handling taxes, and strict rules for tax exemptions and relief programs that can ease some of the burden often leave heirs’ property behind.
As electronic property records and use of AVS become more widespread, the likelihood that a partial interest in an heirs’ parcel may impact Medicaid eligibility has also increased. Although interests in heirs’ parcels are typically not worth a substantial amount of money, Medicaid asset limits are so outdated and so restrictive that even the minuscule monetary value of a fractional heirs’ property interest can render a person ineligible.
Applicants and enrollees with an interest in an heirs’ parcel are put in the tough situation of having to dispose of that interest to be eligible for Medicaid. But the legal process to do so is expensive, complex, and time-consuming – and a resolution is not guaranteed. Moreover, families may simply want to maintain a parcel as heirs’ property for cultural or other personal reasons. Forcing a Medicaid applicant or enrollee to undertake this often long and difficult process to obtain health care risks not only irreparably damaging family relationships and undermining the family’s self-determination, but loss of the land altogether if the heirs cannot afford to purchase the parcel and keep it in the family. Forcing an individual into this unenviable situation so they can qualify for Medicaid is fundamentally unfair. At the same time, the delays in resolving the property issues can mean delay of necessary care, causing great harm to the individual Medicaid applicant.
What Can Be Done?
There is a simple way to address AVS-related issues: Abolish the Medicaid asset test. Asset tests are generally bad policy, and eliminating them would obviate the need for asset verification altogether. Short of that, states could choose to accept attested asset information without further verification (where permitted by federal law), or renew efforts to legislate participation in AVS. To address the unique issues posed by heirs’ property, states could also raise their asset limits or disregard certain types of property.
Conclusion
While electronic asset verification is a welcome and broadly successful modernization effort, it still has gaps that uniquely affect rural residents. This means that people of color, people with disabilities, older adults, and people with lower incomes – people in need of Medicaid – are the ones most likely to have trouble accessing it. The good news is that states have the opportunity to implement a variety of simple reforms to improve Medicaid access for all, especially those in rural communities.
