Medi-Cal is California’s version of the Medicaid program that is funded jointly by the state and federal governments. It is designed to help pay for medical care for low income persons and others with limited resources and high medical bills. Although Medi-Cal recipients often receive Medicare, the Medi-Cal program is not related to the Medicare program.
One of the primary benefits of Medi-Cal is that, unlike Medicare, which only pays for skilled nursing or rehabilitation services for a limited period of time (up to 100 days), the Medi-Cal program will pay for long-term custodial care in a nursing home.
One of the main drawbacks of Medi-Cal for long-term care has been “Estate Recovery.” Medi-Cal, through the California Department of Health Care Services (“DHCS”), attempts to collect any amounts paid through the Medi-Cal program for long-term care in a nursing home. The amount becomes due once the Medi-Cal recipient has died or, if married, both spouses have passed away. Prior to January 1, 2017, Estate Recovery was sought against any and all assets in which the decedent had any interest at the time of death, regardless of whether the assets were held in a living trust, joint tenancy or in a pay-on-death account.
Effective January 1, 2017, a new California law has greatly restricted estate recovery. DHCS, which operates the Medi-Cal program, has now clarified some of the significant issues that have arisen in implementation of the new law.
– DHCS has accepted the definition of “probate estate” set forth in Probate Code §19000. Accordingly, estate recovery will only be sought against an estate subject to formal probate proceedings. Estates that are eligible for summary administration (value of $150,000 or less) will not be subject to estate recovery.
– Even if a probate has been opened, there will be no recovery against a home of “modest value.” This is defined as a home worth less than 50% of the average price of homes in the county in which the home is located. (According to Zillow, the median home value in Nevada County is $429,500.)
– Regardless of value, estate recovery will not be sought against any manufactured or mobile home registered with the Department of Housing and Community Development, (“HCD”).
– Assets that are held in a manner that is designed to pass title following death without probate will be exempt from estate recovery. This includes assets held in a living trust, in joint tenancy, or accounts that have beneficiary designations, such as IRA’s and annuities. It also includes the new Revocable Transfer on Death Deed. As long as there is at least one living beneficiary upon the owner’s death, the property will not be subject to a Medi-Cal Estate Recovery claim.
– There will be no recovery from surviving spouses or registered domestic partners after January 1, 2017, regardless of when the spouse on Medi-Cal died.
– Upon request, Medi-Cal must furnish, at least once per year, an itemized statement showing the balance owing on your Medi-Cal account. The charge for this service is limited to a $5 fee.
The new law only applies to Medi-Cal recipients who died after January 1, 2017. Those who died before the new law took effect are still subject to the old rules.