Protecting Assets From Medi-Cal Recovery

California’s Medi-Cal program is a great program where the state can assist the elderly in the expenses needed, related to medical treatment, managed care and nursing home care. The program allows those who otherwise couldn’t afford it, to get medical, nursing home and similar care.

The problem however, is that after the recipient passes, the state can recover amounts paid under the program, from certain assets that the deceased owned-particularly, the deceased’s home.

What Benefits Must Be Repaid?

Any benefits paid under the program to the deceased, that was received on or after the deceased turned 55, can be recovered by the State, unless the deceased passes with no assets at all.  The law says that the state can never recover your home or try to take your home as repayment for Medi-Cal benefits while you are alive.

But once you pass, the State can recover amounts paid under the Medi-Cal program, including a home that is left to beneficiaries, in the probate process. That means that if you avoid the probate process, there is little need to worry about losing a home that has been left to beneficiaries.

Avoiding Probate Through Estate Planning

Any vehicle that allows a home to transfer before the death of the owner (such as placing the home in a trust), or which otherwise transfers the home automatically upon death, thus avoiding the need for probate, such as a life estate, joint tenancy ownership or a transfer on deed, will also avoid the Medi-Cal collection process. Note that in addition to protection from state recovery under Medi-Cal, a trust also can possibly also protect property from creditors in lawsuits.

There are some drawbacks to placing a home into a living trust—but those drawbacks may not matter, in light of the huge benefits of avoiding the Medi-Cal recovery program.

Remember that a will is not enough, as a will does not avoid probate; other estate planning vehicles like trusts must be used, to keep the estate and the home out of the probate, and thus, protected from Medi-Cal.

Exceptions to Recovery By the State

Note that homes that are passed to a spouse, remain exempt from Medi-Cal recovery, even after the owner’s death, and thus, in these situations, a trust may not be needed to protect property from state Medi-Cal recovery. Additionally, any homes valued at less than half the value of the average home in the county where the property is located, also cannot be taken by the state. Decedents with minors under the age of 21, are also protected from having property taken by the state.

Also note that although Medi-Cal pays for a number of things for the elderly, including medical treatment, the only expenses that the state can recover after death are those expenses related to long term or nursing home care given to the deceased after the age of 55.

Avoiding probate has a number of advantages. Let us help you do that. Call the Torrance will and estate attorneys at Samuel Ford Law today.

Sources:

dhcs.ca.gov/services/Documents/Estate_Recovery_ADA_112015.pdf

canhr.org/publications/PDFs/Medi-Cal_Recovery.pdf