Medi-Cal Recovery Laws
What is Medi-Cal?
Medi-Cal is California's version of the Medicaid program that is funded jointly by the state and federal governments. It is designed to provide free or low-cost medical assistance for low-income or low-resource individuals. There are many different Medi-Cal programs, and eligibility may depend on factors such as age, disability, income or assets.
Covered California is California's version of the Affordable Care Act's health insurance exchange. It is not a Medi-Cal program. Any tax credits or subsidies received through Covered California are not subject to Medi-Cal recovery.
What is Medi-Cal Recovery?
When a Medi-Cal recipient dies, the state can seek repayment for the cost of certain services received that were paid for by Medi-Cal.
What was the Previous Law?
Previously California law allowed claims on the estates of those who received any Medi-Cal benefits when they were 55 years of age or older, regardless of the medical services received or whether recipients were in a nursing home.
After the Medi-Cal recipient died, the state sent the heirs or survivors an "estate recovery claim" asking for payment for the amount of Medi-Cal benefits paid on behalf of the deceased individual. The state did not put a lien on the home and the state did not take away your home. The state did, however, try to collect, and, if you could not get the claim waived and still could not afford to pay, the state did negotiate a "voluntary lien."
What is the Current Law?
Thanks to SB 33 (Hernandez) and SB 833 that incorporated the Medi-Cal recovery reform provisions, Medi-Cal recovery has been severely restricted for those who die on or after January 1, 2017.
The new recovery bill:
• Prohibits claims on the estates of surviving spouses and registered domestic partners;
• Limits recovery for those 55 years of age or older to nursing home and Home and
Community Based Services;
• Limits recovery to only those assets subject to California probate;
• Restricts the amount of interest that the state can charge on liens;
• Requires the state to waive the claim as a substantial hardship when the estate subject
to recovery is a homestead of modest value, i.e., a home whose fair market value is 50%
or less of the average price of homes in the county where the homestead is located;
• Requires the state to provide a current or former beneficiary or their authorized
representative a copy of the amount of Medi-Cal expenses that may be recoverable.
Which Medi-Cal Beneficiaries Will be Subject to Recovery?
For those individuals who die on or after January 1, 2017, Medi-Cal recovery is limited to:
• Beneficiaries who were 55 or older when they received Medi-Cal benefits for nursing
Facility services, certain home and community based services (see following list) and
related hospital and prescription drugs.
• Beneficiaries who were under age 55, if they were "permanently institutionalized" in a
nursing facility, intermediate care facility or other medical institution and for whom,
after notice and opportunity for hearing, it was determined that they cannot reasonably
be expected to be discharged and return home.
Medi-Cal Services Subject to Recovery After January 1, 2017
For those individuals who die on or after January l, 2017, the state can no longer recover
for most basic health services such as doctor's visits, prescription drug costs or managed care
reimbursements, unless the services are related to nursing home care or home and community
based services. The new recovery provisions limits recovery to only those services required to be
recovered under federal law. These include costs related to:
• Nursing home care;
• Intermediate care for developmentally disabled (ICF/DD);
• Home and Community Based Services, including Assisted Living Waiver, Multipurpose
Senior Services Program, Waiver Personal Care Services provided under California's In
Home Operations, and Nursing Facility/Acute Hospital waiver programs; and
• Related hospital and prescription drug services provided to an individual while
receiving nursing facility services or home and community based services.
Estate Recovery Exemptions
Surviving spouse/Registered Domestic Partner: Under previous law (pre-January 1, 2017), there can
be no recovery until after the surviving spouse or registered domestic partner dies. Then the state
can recover from whatever was in the Medi-Cal beneficiary's estate that was left to the surviving
spouse, partner or heirs by distribution or survival, i.e., community property, joint tenancy, or property
left under a will.
After January 1, 2017, if the Medi-Cal recipient is survived by a spouse or a registered domestic partner,
a claim is prohibited and forever barred. However, if the surviving spouse or registered domestic partner
also received Medi-Cal services subject to recovery, his/her estate can be subject to an estate claim
after his/her death.
Surviving Minor/Disabled Children: If the Medi-Cal recipient is survived by a minor child (under age 21),
the state cannot recover, and a claim is forever barred. If the Medi-Cal recipient is survived by a disabled
child of any age, the state cannot recover, and a claim is forever barred. The child does not need to be
living with the Medi-Cal recipient or be an heir to the estate. This is current law and was not changed
by the new statutes.
Estate Recovery Limited to Probate Estate
The state can make a claim against your estate for the amount of the Medi-Cal benefits paid or
the value of the estate, whichever is less. Under the old law, this means that the only way to avoid
recovery is to have nothing left in the Medi-Cal recipient's name at the time of death. For those who
die on or after January l, 2017, recovery is limited to those estates that are subject to probate under
California law. For example, assets transferred via living trusts, joint tenancies, survivorship and life
estates will no longer be subject to recovery. Manufactured homes and mobile homes will also be
excluded from estate recovery claims, since they are not subject to probate in California. A will,
however, depending on the value of the estate, is usually subject to probate in California.
Example 1:
Mindy died after January 1, 2017. She had a home (total value of $200,000), and left it to her daughter
in her will. Medi-Cal paid $50,000 for Mindy's medical services. The state can recover $50,000.
However, if Mindy had left the home in a living trust, joint tenancy, or any transfer that avoided probate,
there would be no recovery.
Example 2:
Mindy left her home in the Mindy Moore Family Trust. Since this is a living trust and not subject
to probate in California, there is no recovery.
What Property is Exempt From an Estate Recovery Claim?
For individuals who die on or after January l, 2017, the following property is exempt from an estate
recovery claim:
• Property transferred prior to death - no longer in the beneficiary's name.
• Property not subject to probate, e.g., living trusts, joint tenancies, survivorship, life
estates, mobile homes, and other manufactured homes.
• Homestead of modest value: a home whose fair market value is 50% or less of the
average price of homes in the county where the homestead is located, as of the date
of the decedent's death. (Note: this is a new hardship waiver, and if the waiver applicant
can prove this is a "homestead of modest value," the state is required to waive the claim.
• Life insurance: You name one or more beneficiaries on your life insurance policy.*
• Retirement accounts: You name a beneficiary on your retirement account(s).*
How Can I Protect My Home?
• Execute a Durable Power of Attorney with gifting and real estate transfer clauses.
• Leave nothing in your estate when you die.
• Unless you are survived by an exempt individual, do estate planning to ensure that your
estate will not be subject to probate.
• If receiving nursing home or certain Home and Community Based Services, consider
transfers. A Medi-Cal recipient can transfer any exempt property to anyone prior to
death without impacting eligibility for Medi-Cal.
How Do I Find Out the Amount of the Estate Recovery Claim?
One of the most frequent complaints from Medi-Cal beneficiaries has been the inability to find
out how much in benefits have been paid on their behalf. As of January 1, 2017, a Medi-Cal
beneficiary who may be subject to recovery, or their authorized representative, can submit
a request to find out the amount of the Medi-Cal claim, for a fee of $5, once per year. If the
beneficiary is enrolled in a managed care plan, the payments to the plan may be included
in a lump sum format and not itemized by the services received.
The new claim request forms and instructions will be available on the Recovery Branch website at:
http://www.dhcs.ca.gov/services/Pages/TPLRD_ER_cont.aspx .
What Happens After a Medi-Cal Recipient Dies?
It is the legal responsibility of the estate (spouse, estate attorney, executor, heir, or person in possession
of the property) to notify the Medi-Cal Recovery Unit within 90 days of the person's death. Notifying
the local Medi-Cal or Social Security office does not count as proper notice. The Recovery Unit in
Sacramento must be notified.
Mail "Notice of Death" - just a short note - with the copy of the death certificate, certified or registered mail, to:
Director of Health Care Services
Estate Recovery Unit, MS-4720
P.O Box 997425
Sacramento, CA 95899-7425
WARNING: A Medi-Cal Recovery questionnaire is usually sent to the heirs or survivors after the Medi-Cal
recipient has died. This form requests information about assets left in the estate.
Legally, there is no obligation to complete this form. You are only required to send a notice of death (a short note)
and a copy of the death certificate.
If there was property left in the estate that will be subject to probate, the estate representative should
call the Law Offices of Shahin Motallebi at (310) 268-1685 before completing the form.
Reviewing the Estate Recovery Claim
1. Check whether the heirs meet any of the exemptions listed under "Estate Recovery
Exemptions," above.
2. Check whether any of the remaining property in the estate is exempt from an estate recovery
claim listed under "What Property is Exempt From an Estate Recovery Claim?"
3. Review the itemization. Check for discrepancies on the claim from specific providers such as a
pharmacy; contact the providing pharmacy to dispute the bill.
4. Review the claim to ensure the following items are not listed, as they are not recoverable:
• In-Home Supportive Services (IHSS) - except certain Personal Care Services provided under one
of the 1915(c) waiver programs.
• Cost of premiums, co-payments and deductibles paid on behalf of Qualified Medicare Beneficiaries
(QMBs), Specified Low-Income Medicare Beneficiaries (SLMBs), Qualifying Individuals, Qualified Disabled
and Working Individuals, QMB Plus, and SLMB Plus who are categorized as groups of dual eligibles as
defined by Section 2602(f) of the Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-148).
If any of these are on the claim, contact the Recovery Collection Unit representative to correct the error.
The claim may be reduced by deducting funeral expenses, estate settlement costs, and attorney's fees.
If I Do Not Meet Any of the Exemptions, How Will I Pay?
If the heirs or survivors or the estate does not meet any of the above exemptions, they should check to see
if they qualify for a hardship waiver - such as the caregiver or homestead of modest value criteria.
If the heirs meet the criteria, the claim must be waived.
If you do not meet any exemptions and are not eligible for a hardship waiver, the claim must be paid. Do not
ignore the claim. If the claim is ignored, the state will send the claim to the Attorney General's office, which
will file a lawsuit. If the hardship is denied, you should work with the Recovery Unit to pay the claim.
The state will work with the applicant's ability to pay in one of the following ways:
1. The heirs can take out a low interest loan or equity loan on the property.
2. If no exemption or hardship waiver is available, the heirs can request a voluntary lien. In addition to the
placement of the lien, the department will require monthly payments, based on the heir's ability to pay.
In the past, these "voluntary" liens accrued interest at 7% annually. As of January 1, 2017, interest on these
liens is capped at the annual Surplus Money Investment Fund interest, (http://www.sco.ca.gov/ard_yield_rates.html )
which is approximately 0.543%, or Simple interest of 7%, whichever is lower.