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New California Budget Restricts Medi-Cal Claims Against Recipients’ Estates

In a recent post we discussed how Medi-Cal, California’s Medicaid system, can go after the assets of a deceased beneficiary recipient’s probate estate or revocable living trust for reimbursement of medical costs paid during the person’s lifetime. There is some good news for future Medi-Cal beneficiaries and their potential heirs. California’s recently adopted state budget includes important provisions designed to limit Medi-Cal “recovery” against estates. This is an important decision that will help many low-income California residents and their families by protecting their homes and savings from mandatory state seizure.

Legislature Adopts Important Protections for Medi-Cal Recipients and Families

There are actually two categories of reimbursements sought by Medi-Cal. The first is for “specified medical assistance, including nursing facility services, home and community-based services, and related hospital and prescription drug services” provided to California residents ages 55 and over. Federal law requires California to seek reimbursement from a recipient’s estate in these cases.

The second category is for “general medical care,” such as routine doctor exams or hospitalizations. Federal law permits, but does not require, state Medicaid programs to seek reimbursements from a recipient’s estate in these cases. California is among a minority of states that choose to pursue estate recovery from this second category.

But that will change starting next year. On June 15, California legislators approved a $122.5 billion state budget. Senate Bill 833 includes a number of measures related to the budget and health care spending. Starting in January 2017, SB 833 limits Medi-Cal’s estate recovery to “those health care services that the state is required to recover under federal law,” that is the first category described above. This means that Medi-Cal will continue to seek estate reimbursement for certain specialized services like nursing home care, but not for general medical care covered by Medicaid.

SB 833 includes several other important protections for Medi-Cal recipients, their families, and estates. Medi-Cal must waive any reimbursement claim, subject to federal approval, against an estate whose principal asset is a home “of modest value,” which is defined as a property whose market value is appraised at “50 percent or less of the average price of homes” in the surrounding county as of the date of the decedent’s death. Medi-Cal will also be prohibited from recovering against an estate where the deceased beneficiary is survived by a “registered domestic partner.” (Spouses are already protected under current law.) Medi-Cal must also provide beneficiary recipients with timely and accurate “information about how much their estate may owe Medi-Cal when they die.”

Get Advice From a California Estate Planning Attorney

The Medi-Cal provisions of SB 833 do not take effect until January 2017, so the estates of recipients who pass away during 2016 may still be subject to reimbursement claims under existing laws. If you or a family member are presently receiving Medi-Cal benefits, you may have many questions about the potential impact of these changes to the law on your estate planning. A San Diego estate planning lawyer can help. Contact the Law Office of Scott C. Soady if you would like to speak with someone right away.

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