Medi-Cal Recovery

After the Medi-Cal beneficiary’s death, the state can make a claim against the estate of an individual who was 55 years of age or older at the time he or she received Medi-Cal benefits or who (at any age) received benefits in a nursing home, unless there is a surviving spouse or a minor, blind or disabled child. Thus, if there are any assets left in the estate of the deceased beneficiary, Medi-Cal will seek to be reimbursed for benefits paid. It is important to note that, even if you received Medi-Cal at home, any benefits paid while you were 55 years of age or older will be subject to Medi-Cal recovery.

How Much Can the State Recover?

California’s definition of “estate” includes such assets as living trusts, joint tenancies, tenancies in common and some life estates. Many consumers place their property into living trusts, thinking that this will protect it from an estate claim, however, it does not. The state can still make a claim against property held in a living trust, joint tenancy or tenancies in common, as long as the beneficiary’s name is still on the property at the time of death.

However, the amount of recovery is limited to the amount of benefits paid or the value of the beneficiary’s estate, whichever is less. For example, if the appraised value of your home is $200,000 and you left it in joint tenancy with your three children, the state can only collect up to $50,000, which is your part of the estate - even if the Medi-Cal benefits paid to you is more than $50,000. The value of the estate is also reduced by any outstanding mortgages or debts on the home. For example, if the home had an outstanding mortgage of $100,000, this reduces the value of the estate to $100,000 (the appraised value of $200,000, minus the mortgage). This, in turn, reduces the amount of the estate claim to $25,000. (The value of the home ($100,000) divided by the four joint tenants.) Deducting the amount of burial costs or estate settlement costs can also reduce the claim.

When the state files an estate claim, they are also required to send an itemized billing of benefits paid over your lifetime. It is important to review the billing to see if there are any errors. As of September 1, 2000, the state ceased collecting for the amount of In Home Supportive Services (IHSS) paid. Thus, if IHSS services are included in the itemized billing, the collection representative should delete this from the billing.

Are There Any Exceptions to A Recovery Claim?

  • Surviving Spouse: The state is prohibited from recovery while a surviving spouse of a deceased Medi-Cal beneficiary is alive. However, after the surviving spouse dies, recovery may be made against any property received by the spouse through distribution or survival, e.g., property left under a will or community property. However, if the home is transferred out of the nursing home resident’s name while he or she is alive, no claim can be placed on the home. Spouses should be careful to “transmute” the property, i.e., through a court order or by having the nursing home spouse sign a declaration relinquishing his/her interest in the property.
  • Minor, Blind or Disabled Child: If a minor child or a blind or disabled child of any age survives the beneficiary, a claim is prohibited by federal law. The surviving child or his/her representative only needs to send proof, such as a birth certificate, that they are the child of the decedent and, in the case of disability, documentation of disability or blindness, such as a Social Security or SSI award letter. If the surviving child does not have documentation of disability from the Social Security Administration, he/she can still file for a disability determination with the Department of Health Services. It is important to note that the surviving child does not have to live in the home (or even in the state, for that matter) in order for recovery to be barred.
  • When There is Nothing Left in the Estate: Since most deceased Medi-Cal beneficiaries leave nothing but their homes, it is most important to look at the deed to the property. Whose name was on the property at the date of death? If the beneficiary transferred the property outright prior to death, then send a copy of the deed, along with a letter explaining that the beneficiary left nothing in his/her estate and ask that the case be closed. If the beneficiary left any funds in an account, these funds must be paid to the state, after documented expenses are deducted, unless there is an exempt survivor or unless you file for a hardship waiver.

What Assets Besides My Home Can the State Claim Against?

Under current law, “estate” is defined as any real or personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including assets conveyed through joint tenancy, tenancy in common, survivorship, life estate, living trust or other arrangement. Because the state has not published clear regulations, the current policies and procedures are important. Anything left in the decedent’s bank accounts, for example, can be subject to recovery, after estate and burial expenses are paid. The state cannot recover from IRAs, work-related pension funds or life insurance policies. As of August 2004, the state can recovery from annuities purchased on or after September 1, 2004, regardless of whether the remainder interest in the annuity is a lump sum or a stream of income.

There are ways to use estate planning to prevent spending down your life savings due to the tremendous cost of long term nursing care.

You may have heard this described as "Medicaid" or "Medi-Cal" planning. Medicaid and Medi-Cal are the federal and state government agencies that pay for long term nursing home care for those who qualify. Qualifying for Medicaid or Medi-Cal is based on certain financial criteria, including your income and assets. Some people think that only poor people can qualify - in reality, many people can qualify if they plan ahead.

We are experts in this type of planning, and we can develop a plan for you to be able to qualify for Medicaid/Medi-Cal when you need it.

These planning strategies are legal, legitimate and proven. You can leave your home and your assets to your family, instead of giving them to the government! If you or someone you love may need nursing home care soon, we can help. If someone you know is already in a nursing home, there are still some planning you can do to protect assets.


©2011 Phillip M Flanigan Attorney at Law