Medi-Cal laws and regulations are a complicated matter, and it can leave beneficiaries confused about their rights. Many people may have heard horror stories about the State making a claim on a deceased beneficiary’s home, and that thought alone could be enough to dissuade a person from using Medi-Cal as a long-term care option. However, if a Med-Cal beneficiary has the right set of advisors, the process of estate recovery can be avoided entirely. Let’s take a closer look at Medi-Cal recovery, what happens when a beneficiary passes away and figure out how to prevent any worst-case scenarios.
What Happens After I Die If I Received Medi-Cal?
A Medi-Cal beneficiary’s home is considered an exempt asset while they are alive, however, once the beneficiary passes away, the home becomes subject to the recovery process if the property is still in the former beneficiary’s name. “If your home or any part of it is still in your name when you die, it is part of your "estate" and can be subject to an estate claim”. The State has the authority to make claims against the estate of a former beneficiary who received Medi-Cal at the age of 55 years or older or against those beneficiaries who (at any age) received Medi-Cal benefits in a nursing home unless the former beneficiary has a surviving spouse or minor, blind or disabled child.
How Much Can the State Recover?
The State is limited in the recovery process and can only retrieve the exact amount paid in Medi-Cal benefits or the value of the beneficiary’s estate (whichever is less). If a deceased beneficiary left an estate valued at $500,000 but only received $100,000 in Medi-Cal benefits, the State would not be entitled to the entire amount the estate’s is worth. On the opposite end, if a person received $500,000 in Medi-Cal benefits and left an estate of $100,000 the debt would be wiped clean with that amount.
Many Medi-Cal beneficiaries place their property into living trusts with the hopes that the document will protect them from the recovery process, however, it will not. If any property is in the beneficiary’s name, the State can still make a claim on living trusts, joint tenancies or tenancies in common. Whenever the State files a recovery claim, they must send an itemized billing detailing the benefits given to the deceased person over their lifetime. However, payments made for personal care services under the “In-Home Supportive Services (IHSS) program” such as the cost of premiums, co-payments, and deductibles paid on behalf of Qualified Medicare Beneficiaries are exempt from recovery.
How Do I Avoid an Estate Claim?
The best and only way to avoid an estate claim is by leaving nothing in the estate. A beneficiary’s home continues to be exempt in the Medi-Cal qualifying process, however, if the property is not transferred out of that person’s name before death, the property becomes subject to the recovery process by the State. The key is to transfer any property out of a beneficiary’s name while they are still living. Of course, any transfer of property will be subject to tax regulations and any person considering such an action should first consult with an experienced Medi-Cal planning attorney.