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Medi-Cal (California Medicaid) is a government program that pays for certain types of essential medical services. Medi-Cal can be a vital resource for those who are retirement age because the program pays for long-term nursing home care expenses. When a Medi-Cal recipient dies, however, their estate may have to repay their Medi-Cal program costs through something called the Medi-Cal estate recovery. This often raises the question: How do I protect my assets from nursing home care? The good news is that there may be ways that you can protect your assets from recovery while still qualifying for Medi-Cal. Here is more on how to avoid Medi-Cal estate recovery.
The Medi-Cal program pays for certain types of medical expenses for individuals who cannot afford to pay for them on their own. After a Medi-Cal recipient dies, the program can seek repayment from their estate for the cost of the services they received. This process is called Medi-Cal estate recovery.
Medi-Cal is income-tested and imposes an asset limit of $2000 for an individual and $3000 for a couple. However, when you apply for Medi-Cal, some of your assets may be considered exempt or non-countable for purposes of assessing your means eligibility. Your primary residence and certain other assets are exempt, meaning you are allowed to own and live in your home while qualifying for Medi-Cal benefits. When you pass away, anything you own is considered to be part of your estate and, therefore, may be subject to Medi-Cal estate recovery. This means that the State can pursue payment from your probate estate to pay for your Medi-Cal services.
Outside of certain limited exceptions, the State can make a Medi-Cal recovery claim against a former recipient’s estate. The “estate” refers to the recipient’s real and personal property as defined by California probate law. However, the claim is limited to the lesser of the amount of Medi-Cal benefits received or the value of the estate. Any outstanding debts and mortgages can also reduce the estate’s value. Additionally, if the recipient had an insurance policy, IRA, or pension benefit, those funds would not be part of the estate recovery unless the State was named as a beneficiary or they reverted to the estate.
Planning for your long-term care needs through Medi-Cal should be part of an overall comprehensive estate plan. Medi-Cal planning should also be conducted long before the potential need for services arises. If you don’t have long-term care insurance and don’t expect to have the means to pay out-of-pocket for nursing home care, the time to start Medi-Cal and estate planning is now. By planning, you may be able to keep some assets out of your probate estate. If the property is not subject to California probate, the State cannot pursue it through Medi-Cal recovery. For instance, property placed into a living trust or held through a joint tenancy is not subject to California probate and, therefore, would not be subject to Medi-Cal estate recovery.
If you want to avoid Medi-Cal estate recovery completely, you can do so by leaving nothing in your estate. This will mean making sure that all exempt assets such as your personal residence and vehicle are not in your name at the time of your death. Making certain that ownership is transferred is just one part of the equation. The best way to protect your assets from nursing home care and Medi-Cal estate recovery and plan for the future is by working with an experienced Medi-Cal and estate planning attorney. You and your attorney can work together to develop a Medi-Cal estate planning strategy that is suited to your circumstances and protects your interests.
At the Law Offices of Alice A. Salvo, we are California Medi-Cal and estate planning attorneys with the experience you need to plan for your future. We can help you evaluate your circumstances and determine the best estate planning and Medi-Cal solutions for you. Please get in touch with us online or by phone to schedule an appointment today.