Medi-Cal Recovery: Life Insurance Proceeds And Your Assets

Medi-Cal is a federal and state-funded program that provides free or low-cost medical assistance to individuals in California who meet certain income and wealth thresholds. The program can seek repayment for certain services from individuals aged 55 or older who received services at a nursing home, care center for the developmentally disabled, or home and community-based institutions. The state will notify the deceased's estate through the mail and seek repayment from the assets of the deceased. The estate's conservator or surviving heir will manage the repayment process but will not be responsible for using their own funds. The state may waive its claim if it causes substantial hardship.

What is the Medi-Cal Estate Recovery Program?

The Medi-Cal Estate Recovery Program is the California implementation of the federal Medicaid program. It provides California residents who are aged, blind, or disabled with affordable healthcare options.

If a Medi-Cal recipient is over 55 years old, the California Department of Health Care Services will exclude the individual's principal residence when determining their Medi-Cal eligibility. However, upon the recipient's death, the Department will seek reimbursement for certain healthcare services received while the individual was alive and over 55 through the Medi-Cal asset recovery program.

The Department's right to Medi-Cal recovery is governed by California Welfare and Institutions Code section 14009.5, which was recently amended with changes that generally limit the Department's right to reimbursement. The rules now vary depending on whether the decedent died before, on, or after January 1, 2017, the effective date of the amendment.

Under the former version of Section 14009.5, the Department was required to seek reimbursement for most healthcare services received or monthly managed care premiums paid on behalf of a Medi-Cal recipient. The new rules, however, limit the Department's right to reimbursement to specific services, including nursing facility services, home and community-based services, and related hospital and prescription drug services.

Regarding estate assets, the former rules allowed the Department to seek reimbursement from a decedent's "estate", which was broadly defined to include various types of property and assets. The new rules, however, limit the Department's recovery to a decedent's probate estate, excluding non-probate assets such as living trust assets.

The new rules also introduced changes regarding surviving spouses or registered domestic partners. Under the former rules, the Department could not seek reimbursement during the surviving spouse's lifetime, but could make a claim against the spouse's estate upon their death. The new rules completely exempt spouses or registered domestic partners from any claims for reimbursement.

Both the former and current versions of Section 14009.5 provide exemptions to the right to Medi-Cal reimbursement in certain circumstances, such as when the decedent is survived by a child who is under 21 or is blind or permanently disabled. Additionally, if enforcement of the claim would result in substantial hardship for the decedent's dependents, heirs, or survivors, the Department may waive its claim in whole or in part.

Who is eligible for Medi-Cal repayment?

In California, individuals who received Medi-Cal services on or after their 55th birthday are eligible for compulsory repayment. This repayment is billed for services provided at specific institutions, including nursing homes, care centres for the developmentally disabled, and home and community-based institutions such as assisted living facilities, multipurpose senior programs, and acute hospitals. However, it's important to note that In-Home Supportive Services (IHSS) assistance is exempt from recovery.

There are certain circumstances under which the state cannot seek compulsory repayment. If the individual is survived by a spouse, registered domestic partner, a child under the age of 21, or a disabled child, the state cannot pursue repayment. Additionally, if it is determined that enforcing repayment would result in substantial hardship for the individual's dependents, heirs, or survivors, the state may waive its claim partially or entirely.

It's worth noting that the rules and guidelines regarding Medi-Cal repayment are subject to change and evolution. Seeking legal advice or consulting official California government sources is recommended to stay informed about the most current eligibility criteria for Medi-Cal repayment.

What happens if you can't afford repayment?

If you can't afford to repay Medi-Cal, there are a few things you can do to try and resolve the situation. Firstly, it's important to understand that California's Medi-Cal program is complex and there are different rules depending on your specific circumstances. Here are some steps you can take:

• Contact the county social services department that handles Medi-Cal and request a form to report your change in financial situation. You can also report the change over the phone, but having a paper trail by submitting a document is advisable. Be honest and report all changes as soon as you become aware of them.
• If you are certain that you no longer qualify for Medi-Cal due to an increase in income or other reasons, you can request that your Medi-Cal coverage be terminated using the appropriate form. This way, you won't accrue further costs.
• If you still require health insurance coverage, you can explore other options such as Covered California. This is a free service from the state that helps Californians get and pay for quality health insurance. In some cases, this coverage can be obtained at no cost, similar to Medi-Cal.
• If you are facing difficulties in repaying any outstanding amounts to Medi-Cal, you may be able to negotiate a payment plan or request a hardship waiver if you meet certain criteria. Contact the Department of Health Care Services or a qualified attorney to discuss your options.
• Seek professional advice from a Medicaid Planner or an attorney who specializes in health insurance and government assistance programs. They can guide you through the complex rules and help you understand your options based on your specific situation.

Remember, it's important to take prompt action and be proactive in addressing any issues related to your Medi-Cal coverage and repayment obligations. By being honest and cooperative, you can work towards resolving the situation and ensuring you have the necessary health coverage you need.

Can the Estate Recovery Program take your house?

The Estate Recovery Program (MERP) is a mandatory program that allows a state's Medicaid agency to seek reimbursement for all long-term care costs paid on behalf of a Medicaid beneficiary. This includes nursing home care, home and community-based services, and hospital and prescription drug costs related to long-term care.

MERP can put a lien on a Medicaid recipient's home, but not all states do. A lien is a way to guarantee payment of a debt and essentially does not allow a home to be sold without existing debt being paid first. A lien cannot be put on a home if any of the following relatives live there:

• Their spouse
• Their child under 21 years old
• Their disabled or blind child (of any age)
• Their sibling, who has an equity interest in the home and has lived there for at least a year immediately preceding the Medicaid recipient's nursing home admittance

If a Medicaid recipient passes away, the state can seek reimbursement through the Medi-Cal asset recovery program for certain health care services received while the individual was alive and over 55 years old. However, if the recipient is over 55 years old, the Department will exclude the individual's principal residence when determining Medi-Cal eligibility.

While MERP can put a lien on a home, it cannot seize or place a lien on a home if certain conditions are met. Additionally, if the beneficiary has a spouse living in the community, a certain amount of their combined resources is protected for that spouse, so they can continue living independently. This is called the "spousal impoverishment" provision.

In summary, while MERP can put a lien on a home, it cannot take the house directly. The state can seek reimbursement for long-term care costs through the estate recovery program, but there are exemptions and waivers in place to protect individuals and their families.

How do you avoid being billed by the Estate Recovery Program?

The Estate Recovery Program (ERP) is a federal and state-funded program that seeks to recover costs from individuals enrolled in Medicaid who received services on or after their 55th birthday. ERP can seek repayment for services provided at nursing homes, care centers for the developmentally disabled, or home and community-based institutions.

If you want to avoid being billed by the Estate Recovery Program, you can:

• Remove your name from deeds, auto registrations, etc.
• Name another beneficiary instead of your estate on life insurance policies.
• Set up a living trust, joint tenancy, or a transfer with an irrevocable life estate.
• Consult an attorney experienced in Medi-Cal rules and regulations for further assistance.

Frequently asked questions