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.
California’s definition of “estate” is limited to a decedent’s probate estate. Thus, as long as probate is avoided there will be no estate recovery. (Effective January 1st, 2017)
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.
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.
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, it is not too late to plan. If done correctly, assets can still be legally protected.