It is generally understood that California’s Medicaid program, known as Medi-Cal, has the ability to seek reimbursement of the medical costs paid out during an individual’s lifetime from that person’s probate estate after their death. In fact, this is a big concern for most people considering whether to apply for Medi-Cal to cover their nursing home expenses. However, we are aware of the new bill recently passed in California that limits Medi-Cal’s recovery against your probate estate.
Medi-Cal and nursing home care
Medi-Cal is California’s name for its Medicaid program. Like all other Medicaid programs, it is funded by both federal and state funds but run by the State. The California Department of Health Care Services (DHCS) manages long-term care programs in California, including nursing home services. In general, skilled nursing facilities offer round-the-clock skilled nursing care in addition to other supportive services. Nursing homes are typically rather expensive, averaging over $8,000 per month in California. Most people cannot afford to pay their own nursing home expenses. That is where Medi-Cal benefits come in.
Estate recovery after your death
Once you die, though, there is a likelihood that the state’s Medi-Cal agency will seek to recoup the benefits paid for your care from your estate. This is known as “estate recovery.” In most cases, the only property of any substantial value that a Medi-Cal recipient has at the time of his or her death is the home. But, there are ways to protect your home from estate recovery. Consult with us to determine your options.
Important legislation for Medi-Cal recipients and their families
When it comes to Medi-Cal recovery, where the program seeks reimbursement for the benefits it provides, there are essentially two types of recovery sought. The first type is required by Federal law and it seeks reimbursement for “specified medical assistance, including nursing facility services, home and community-based services, and related hospital and prescription drug services” that were provided to California residents ages 55 and over.
The second type of reimbursement is for “general medical care,” such as routine doctor visits and hospitalizations. Although Federal law allows Medi-Cal to seek reimbursement for those services, it is not required. California was among only a few states that chose to seek estate recovery for general medical care. That has changed as of January 2017.
New provisions of California’s state budget provide relief
In last year’s state budget bill, there are provisions the goal of which is to limit Medi-Cal recovery against the estates of recipients. These new measures will provide much-needed protection for California residents and their homes and savings against the prior mandatory state seizure.
As of January 2017, Medi-Cal’s estate recovery were limited to “those health care services that the state is required to recover under federal law,” which is basically the first category. So, while Medi-Cal will continue to seek to recovery for certain specialized services like nursing home care, it will no longer seek reimbursement for general medical care.
Additional protections for Medi-Cal recipients
Another important provision states that Medi-Cal is required to waive reimbursement claims against estates where the principal assets is a home “of modest value,” subject to federal approval. This exception applies to property with a market value appraised at “50 percent or less of the average price of homes” in the surrounding county. This is determined as of the date of the decedent’s death.
Spouses were already protected against Medi-Cal recovery. Now registered domestic partners are equally protected. This means the Medi-Cal will not recover against an estate if the deceased recipient is survived by a registered domestic partner. For those whose estates may be subject to recovery, Medi-Cal is required to provide beneficiary recipients with timely and accurate “information about how much their estate may owe Medi-Cal when they die.”
An irrevocable Medi-Cal trust can also protect your assets
Using an irrevocable Medi-Cal trust can also protect your assets from creditors and legal judgments. This is helpful for beneficiaries as well, especially those who may not be as good at managing their finances generally. If you gift your home to the trust, it will remain sheltered and out of the reach of creditors, including the creditors of your beneficiaries.
If you have questions regarding Medi-Cal recovery or any other probate matters, please contact us at the Northern California Center for Estate Planning and Elder Law for a consultation. You can contact us either online or by calling us at (916) 437-3500. We are here to help!