Changes to Medi-Cal Estate Recovery in 2017

Changes to Medi-Cal Estate Recovery in 2017

By |2017-08-11T09:08:01+00:00Tuesday, July 18th, 2017|Bridget's Blog, Medi-Cal, Medi-Cal Law|4 Comments

I’ve written about Medi-Cal estate recovery in the past, but today I’m going to talk about some big changes that became effective earlier this year. For Medi-Cal beneficiaries who die on or after January 1, 2017, the Medi-Cal estate-recovery rules have changed. Some of these changes only impact recipients of Medi-Cal benefits other than long-term care, but some apply across the board. Let’s see what’s different now for long-term Medi-Cal beneficiaries.

1. Survivors

Under pre-2017 law, Medi-Cal could not recover from someone’s estate if he or she was survived by a spouse or registered domestic partner, but it could recover from the surviving spouse’s or partner’s estate when he or she died.

Under the new law, Medi-Cal cannot recover against an estate if the Medi-Cal beneficiary was survived by a spouse or registered domestic partner, unless the spouse or registered domestic partner was also enrolled in Medi-Cal. In addition, Medi-Cal cannot recover against an estate if the beneficiary was survived by a child who (A) is less than 21 years old; or (B) is of any age and blind or disabled.

2. Non-Probate Assets

Under the old rules, Medi-Cal could make a claim against any property that was in the beneficiary’s name at the time of his or her death, including property that passed outside of probate. This included, for example, property owned by a living trust or as a joint tenant.

Under the new rules, Medi-Cal can only recover against property in an individual’s probate estate. This expands beneficiaries’ planning options dramatically.

3. Modest Homestead Exemption

Pre-2017 law allowed the state to assert a claim against a person’s home after the person (and any surviving spouse) died.
The new law still permits that, but directs Medi-Cal, subject to federal approval, to waive a recovery claim against an estate that is a “homestead of modest value.” A homestead of modest value is a home that, on the beneficiary’s date of death, was worth 50% or less of the average price of homes in the county where it is located.

4. Interest on Voluntary Liens

The old law allowed heirs to pay off a Medi-Cal recovery claim over time. To do so, they would give a voluntary lien to Medi-Cal in the property they received from the Medi-Cal beneficiary. Simple interest on the amount due accrued at a rate of 7% per year.

The new law still allows for these voluntary liens, but it reduces the rate at which interest accrues. Now, interest accrues at the lower of 7% or the annual average rate earned on investments in the Surplus Money investment fund during the prior calendar year. For 2017, that rate is approximately 0.55%.

As you can tell, these changes are a big deal. They change some of the considerations in Medi-Cal planning. But what they don’t change is the need to have Medi-Cal planning. None of these changes affect Medi-Cal’s eligibility rules, so you still need the help of a qualified Medi-Cal attorney before applying.

About the Author:

Bridget Mackay is a Petaluma estate planning attorney who has been practicing law since 1996. She is a member of the Sonoma County Bar Association, California State Bar Association Trust and Estates Section and on the Board of the Sonoma County Women in Law. She also sits on the Board of the Cinnabar Arts Corporation in Petaluma. Connect with Bridget on Google

4 Comments

  1. Leasha brinkley October 29, 2018 at 1:33 pm - Reply

    can medical go after a settlment wich was issued to her children she owned bpno home and had nothing, 5 yrz after her death

    • Cheyenne Stevens November 14, 2018 at 1:28 pm - Reply

      Typically Medi-Cal recovery is limited to assets titled in the recipients name after death.

  2. Leashes brinkley January 15, 2019 at 6:29 pm - Reply

    In still a little confused ,my mother passed about 5 yrs ago she as in a class act lawsuit that I did all the footwork on as her rep, for my six siblings,there was definitely a search they private to see if she had any debts,which the are none. The huge finally came to a conclusion,that my mom’s share would was set,at 123,000 give it take, so a hired company does along and says a reimbursement lien is due to medical for her after care which ,she never had,and the doctor statements and visits are incorect,,even though medical had no lien on my mom, she died as poor as can be,are me and my s siblings only entitled to 14% of 35,000,? Or can we change this, or what our the options to us?

    • Bridget Mackay January 29, 2019 at 11:11 am - Reply

      I would need to know more about the situation before answering your question, I would recommend contacting a local attorney and scheduling a consultation.

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