By: Matthew M. Shafae, Attorney
Litherland, Kennedy & Associates, APC, Attorneys at Law
The future of Medi-Cal eligibility has been the subject of speculation for a little over a decade now. Will the California implementation of the federal Medi-Cal system, known as Medi-Cal, finally implement federal laws enacted back in 2005? And now, with a Republican president-elect and a Congress with a Republican majority in both houses, it appears Medi-Cal funding may be an additional topic for speculation. How will Medi-Cal funding change? If the Affordable Care Act (Obamacare) is repealed, will that impact Medi-Cal coverage? Unfortunately, all we can do is to keep guessing until we see a clear policy proposal. There are no definitive answers in that regard, yet.
Fortunately, though, there is some definitive news for those that currently receive Medi-Cal benefits (or plan to receive Medi-Cal benefits) to help pay for long term care. As of January 1, 2017, California law provides added protection for estates that may be subject to Medi-Cal recovery.
Governor Brown signed into law Senate Bill 833. It is codified as Welfare and Institutions Code § 14009.5. The new law limits Medi-Cal recovery in the following ways:
- Prohibits claims on the estates of surviving spouses and registered domestic partners;
- Limits recovery for those 55 years of age or older to only the amounts spent on 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; and
- Requires the state to provide to current or former beneficiary or their authorized representative a copy of the amount of Medi-Cal expenses that may be recoverable.
While all the above limitations are an important triumph for Medi-Cal recipients, the most significant development is the one in bold. After January 1, 2017, only those assets subject to the court death probate are recoverable. Put another way, if you hold assets in a living trust, they are not subject to Medi-Cal recovery. This change in the law eliminates much of the complexities of Medi-Cal recovery planning. With a living trust, your assets will be shielded from Medi-Cal recovery. However, holding assets in a living trust does not guarantee that you qualify for Medi-Cal. The eligibility requirements for Medi-Cal remain unchanged. Therefore, even though you may be protected from recovery, you still must qualify for Medi-Cal before concerning yourself with Medi-Cal recovery.
- Reasons an Estate Plan Could Be Challenged: Part 1 – Formal Requirements - January 24, 2020
- Estate Tax Exemption Amounts to Increase - November 6, 2019
- Beneficiary Designations, etc., Aren’t a True Substitute for a Trust - March 6, 2019