A Recap on Medi-Cal’s Estate Recovery Program
Did you know that if you are a Medi-Cal recipient and are age 55 or older, the government can demand a payment from your estate if you pass away with medical costs?
This is called estate recovery. Unfortunately, many families do not find this out until it happens to them. Medi-Cal is California’s version of the federal Medicaid program, which provides healthcare services for low-income individuals.
Even if a Medi-Cal recipient never uses medical coverage, California’s Department of Health Care Services may still come to collect on the costs of the monthly payments that Medi-Cal makes for care plans to cover its enrollees. This means that families who are still grieving the loss of a loved one may be suddenly hit with a bill attempting to recover thousands in medical costs incurred for simply being a Medi-Cal enrollee.
Fortunately for families aggrieved by the state’s Estate Recovery Program, there are some rule changes for 2017. If a Medi-Cal enrollee dies on or after January 1, 2017, new regulations will significantly cut down what the federal government can collect from the enrollee’s estate after death. According to Patricia McGinnis, the executive director of California Advocates for Nursing Home Reform, “People who are 55 and over don’t have to worry nearly as much about Medi-Cal recovery now,” than in previous years.
States are required by the federal government to recover medical costs from Medi-Cal and Medicaid recipients, with these costs usually related to nursing home care. Before these rule changes, California could recover from nearly all Medi-Cal coverage received after the age of 55, and in fact, was one of several states that went beyond the federal Medicaid mandate for seeking repayment. In the fiscal year from October 1, 2015 to September 30, 2016 alone, California collected nearly $70 million through its estate recovery program, according to spokesman Tony Cava of the Department of Health Care Services.
The Biggest Changes for the Estate Recovery Program in 2017
1) Property Protections
In the past, the only way to limit an estate recovery was to leave nothing in the Medi-Cal recipient’s name at the time of his or her death. However, should the Medi-Cal recipient pass away on or after January 1, 2017, new limitations are now in place where the state can only recover those estates that are subject to probate under California law. This means that if you have no assets that go through probate, the state cannot recover anything from your estate.
For example, if you have established an estate plan such as a living trust, or if you hold title to a real property as joint tenants with right of survivorship, then your property would be protected from an estate recovery.
Probate is the court-supervised legal process for transferring your assets according to your will, or according to state law if you don’t have a will. In order to shield your properties and assets from probate, take advantage of creating an estate plan such as a living trust with your estate planning attorney in order to protect your home and assets from an estate recovery.
2) New Limitations for Recovery
In 2017, the changes to estate recovery laws limit California estate recovery to the federal minimum. This means that:
- Medi-Cal may no longer seek recovery for the monthly payments it makes on the enrollee’s behalf for managed care plans
- Medi-Cal may still recover costs for services related to a nursing home, a home-based service, a community-based service, or a prescription drug service
- If you have a “homestead of modest value,” you are protected and exempt from recovery on your home. The Department of Health Care Services defines a homestead of modest value “as a home whose fair market value is 50 percent or less of the average price of homes in the county where the homestead is located as of the date of the decedent’s [Medi-Cal recipient’s] death.”
3) Lower Interest on Liens
If you’re a Medi-Cal recipient over age 55 and you pass away, your heirs may be left unable to pay for Medi-Cal’s estate recovery claim. One of their options would be to sign a “voluntary lien” on your property. With the new rule changes, the interest rate will drop significantly lower than the 7% that California used to charge on voluntary liens.
Protect Your Family from Medi-Cal Estate Recovery and Probate
Take advantage of the knowledge you now have about Medi-Cal ‘death fees’ and estate recovery so that you can help your family avoid paying huge bills and even losing their home after your death. The safest option is always to consult your estate planning attorney to discuss Medi-Cal planning and estate planning.
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