Saving Your House From Medi-Cal’s New Estate Recovery Rules

Saving Your House From Medi-Cal’s New Estate Recovery Rules

In 2016 Governor Brown signed SB 833 into law, changing the way that California seeks repayment from deceased Medi-Cal recipients.  This change in the law provides yet another good reason to engage in careful estate planning so that estates will not go to Medi-Cal upon death.

Prior to January 1, 2017, California law allowed the California Department of Health Care Services (DHCS) to seek repayment for Medi-Cal services from the property of a deceased Medi-Cal recipient.  The rules allowed for recovery from any assets owned by the decedent at the time of death, regardless of how those assets were titled or held.  DHCS could also seek repayment for Medi-Cal services provided to a pre-deceased spouse.  This often resulted in Medi-Cal taking some or all of the decedent’s property leaving little or nothing to be inherited by the family.

The new law, which takes effect for anyone who dies after January 1, 2017, still allows DHCS to seek repayment for services provided to a deceased Medi-Cal recipient, but only from estate assets that are subject to probate.  DHCS may not seek repayment for Medi-Cal services provided to a predeceased spouse, and they may not recover from property that is not subject to probate, such as property held in joint tenancy or property held in a trust.

According to recent statistics, as many as 1 of every 3 Californians receive Medi-Cal.  Many people who need long-term nursing home care become qualified for Medi-Cal.  The high cost of nursing home care often results in Medi-Cal paying significantly more in benefits than the value of the decedent’s estate.  Without planning, a person’s estate can easily be reduced, leaving nothing to be inherited by the decedent’s loved ones.

With this change in the law, it is essential that people do appropriate estate planning so that estates can be preserved for family.  If estate planning was done before 2017, the documents should be reviewed by an estate planning attorney.  Californians should not miss out on this great opportunity to save as much of their estate as possible for inheritance by their loved ones.

Mark Flory

Mark Flory

Mark Flory is Special Counsel with Brown White & Osborn LLP. His practice focuses in the areas of probate and trust administration and litigation, estate planning, conservatorships, and protecting elders and individuals with disabilities.
Mark Flory