Medi-Cal and Disaster Payments

by Justin M. Kennedy
Litherland, Kennedy & Associates, APC, Attorneys at Law

What if a fire or other natural disaster hit your home or a loved one’s home?  Could this result in Medi-Cal disqualification?  Let’s discuss.

The home of the Medi-Cal recipient is an exempt asset, meaning the recipient may keep their home while receiving Medi-Cal.  If the home is sold, the proceeds from the sale could result in Medi-Cal disqualification.  But what if that home rather than being sold, was instead destroyed in a natural disaster?  Would the Medi-Cal recipient lose their government benefits upon receiving the disaster assistance funds or insurance payment?

The proceeds resulting from “disaster assistance funds from federal, state, or local government agencies, or disaster assistance organizations, are permanently exempt and shall not be counted as income or property.” (All County Welfare Letter 92-08).  This means that if the money received is disaster assistance funds from the government, then there is no Medi-Cal disqualification.

What if the payment is coming from an insurance policy?  Payments from insurance in federally declared disaster areas are exempt and would not result in disqualification.  This requires the federal government to declare the area as a disaster, and there are four ways that the federal government may do this:

A qualified disaster is defined as a disaster that:

• Results from terrorist or military actions
• Results from an accident involving a common carrier
• Is a Presidentially declared disaster
• Is an event that the Secretary of the Treasury determines is catastrophic

(All County Welfare Directors Letter No.: 15-36)

If the area is not a federally declared disaster area, then insurance payments for losses may be treated as available assets which could result in Medi-Cal disqualification.

If you want to learn more about Medi-Cal, what assets are exempt for Medi-Cal eligibility purposes and strategies to protect your assets, I invite you to attend one of our upcoming Medi-Cal Planning Workshops.