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California’s Medi-Cal applicants and beneficiaries are often confused
about their rights regarding Medi-Cal and are particularly concerned
that the state will “take” their homes after they die if they received
Medi-Cal benefits. The following “Frequently Asked Questions” attempts
to answer some of these concerns and to provide consumers with the
information necessary to make informed choices about their estates when
they are applying for Medi-Cal.
I. Can The State Take my Home If I Go On Medi-Cal?
The State of California does not take away anyone’s home per se. Your
home can, however, be subject to an estate claim after your death. For
example, your home may be an exempt asset while you are alive and is
not counted for Medi-Cal eligibility purposes. However, if the home is
still in your name when you die, the state can make a claim against
your probate estate for the amount of the Medi-Cal benefits paid or the
value of the estate, whichever is less.
As of 2017, State
of Califonia has limited Medi-Cal's right to recovery from probate
estates for deaths that occur after 1/1/17. Much remainst
to be seen regarding the details of the rules.
II. Can the State Put a Lien on My Home?
Consumers often confuse liens and estate claims. Both have been used by
the state in attempts to reimburse the Medi-Cal program for payments
made to beneficiaries. Liens are placed on living Medi-Cal
beneficiaries’ estates to “hold” the property until the person dies.
Estate claims are claims made against the estate of the Medi-Cal
beneficiary after he or she dies. As of January 1, 1996, California is
not permitted to impose liens against the homes of nursing home
residents or their surviving spouses, except in cases where the home is
not exempt (i.e., the nursing home Medi-Cal applicant did not indicate
an intention to return home) and the home is being sold. Under current
law, these are the only liens that can be placed on the homes of living
Most Medi-Cal applicants’ homes are exempt because a spouse, child or
sibling lives there or they do indicate an intention to return home on
the Medi-Cal application, so even these liens are rare. After the
beneficiary has died, the heirs or survivors may sign a “voluntary”
lien for Medi-Cal recovery purposes, if they can’t otherwise have an
estate claim against the property waived.
III. What Happens After I Die If I Received Medi-Cal?
After the Medi-Cal beneficiary’s death, the state can make a claim
against the estate of an individual who was 55 years of age or older at
the time he or she received Medi-Cal benefits or who (at any age)
received benefits in a nursing home, unless there is a surviving spouse
or a minor, blind or disabled child. Thus, if there are any assets left
in the estate of the deceased beneficiary, Medi-Cal will seek to be
reimbursed for benefits paid. It is important to note that, even if you
received Medi-Cal at home, any benefits paid while you were 55 years of
age or older will be subject to Medi-Cal recovery.
IV. How Much Can the State Recover?
California’s definition of “estate” includes such previously immune
assets as living trusts, joint tenancies, tenancies in common and life
estates. Many consumers place their property into living trusts,
thinking that this will protect it from an estate claim. It does not.
The state can still make a claim against property held in a living
trust, joint tenancy or tenancies in common, as long as the
beneficiary’s name is still on the property at the time of death.
However, the amount of recovery is limited to the amount of benefits
paid or the value of the beneficiary’s estate, whichever is less. For
example, if the appraised value of your home is $200,000 and you left
it in joint tenancy with your three children, the state can only
collect up to $50,000, which is your part of the estate - even if the
Medi-Cal benefits paid to you is more than $50,000. The value of the
estate is also reduced by any outstanding mortgages or debts on the
home. For example, if the home had an outstanding mortgage of $100,000,
this reduces the value of the estate to $100,000 (the appraised value
of $200,000, minus the mortgage). This, in turn, reduces the amount of
the estate claim to $25,000. (The value of the home ($100,000) divided
by the four joint tenants.) Deducting the amount of burial costs or
estate settlement costs can also reduce the claim.
When the state files an estate claim, they are also required to send an
itemized billing of benefits paid over your lifetime. It is important
to review the billing to see if there are any errors. As of September
1, 2000, the state ceased collecting for the amount of In Home
Supportive Services (IHSS) paid. Thus, if IHSS services are included in
the itemized billing, the collection representative should delete this
from the billing.
V. Are There Any Exceptions to An Estate Claim?
A. Surviving Spouse: The state is prohibited from recovery while a
surviving spouse of a deceased Medi-Cal beneficiary is alive. However,
after the surviving spouse dies, recovery may be made against any
property received by the spouse through distribution or survival, e.g.,
property left under a will or community property. However, if the home
is transferred out of the nursing home resident’s name while he or she
is alive, no claim can be placed on the home. Spouses should be careful
to “transmute” the property, i.e., through a court order or by having
the nursing home spouse sign a declaration relinquishing his/her
interest in the property.
B. Minor, Blind or Disabled Child: If a minor child or a blind or
disabled child of any age survives the beneficiary, a claim is
prohibited by federal law. The surviving child or his/her
representative only needs to send proof, such as a birth certificate,
that they are the child of the decedent and, in the case of disability,
documentation of disability or blindness, such as a Social Security or
SSI award letter. If the surviving child does not have documentation of
disability from the Social Security Administration, he/she can still
file for a disability determination with the Department of Health
Services. It is important to note that the surviving child does not
have to live in the home (or even in the state, for that matter) in
order for recovery to be barred.
C. When There is Nothing Left in the Estate: Since most deceased
Medi-Cal beneficiaries leave nothing but their homes, it is most
important to look at the deed to the property. Whose name was on the
property at the date of death? If the beneficiary transferred the
property outright prior to death, then send a copy of the deed, along
with a letter explaining that the beneficiary left nothing in his/her
estate and ask that the case be closed. If the beneficiary left any
funds in an account, these funds must be paid to the state, after
documented expenses are deducted, unless there is an exempt survivor or
unless you file for a hardship waiver.
VI. What Else Besides My Home Can the State Claim Against?
Under current law, “estate” is defined as any real or personal property
and other assets in which the individual had any legal title or
interest at the time of death (to the extent of such interest),
including assets conveyed through joint tenancy, tenancy in common,
survivorship, life estate, living trust or other arrangement. Because
the state has not published clear regulations, the current policies and
procedures are important. Anything left in the decedent’s bank
accounts, for example, can be subject to recovery, after estate and
burial expenses are paid. The state cannot recover from IRAs,
work-related pension funds or life insurance policies. As of August
2004, the state can recovery from annuities purchased on or after
September 1, 2004, regardless of whether the remainder interest in the
annuity is a lump sum or a stream of income. Because the recovery
regulations are fluid, call the CANHR office if you have specific
questions regarding recovery.
VII. How Does the State Know When a Medi-Cal Beneficiary Dies?
A. Notice of Death: When a Medi-Cal beneficiary dies, the County
Medi-Cal office notifies the Department of Health Services in
Sacramento and benefits are terminated. However, for recovery purposes,
the burden of notifying the State of the death is still on the
beneficiary’s estate. California law, under Probate Code §215, requires
that, when a deceased person has received or may have received health
care benefits or was the surviving spouse of a person who received such
benefits, the estate attorney, the beneficiary of the estate, the
personal representative or the person in possession of the property is
required to notify the Director of the Department (at the Sacramento
office of DHS) no later than 90 days after the person’s death. A copy
of the death certificate is required to be sent. Because neither the
law nor the regulations indicate the Director’s address, and since most
consumers simply notify the county office, it is important that you
send the notice and death certificate to the correct address, if you
want the matter to be addressed in a timely manner. It is recommended
that the notice of death and the death certificate be sent by
registered or certified mail to: Director, DHS, MS-4720, P.O. BOX
997425, Sacramento, CA 95899-7425.
The director has four (4) months after receipt of the notice in which
to file a claim. If a claim is not filed within that period, the state
is forever barred.
B. Beware of Forms: The Recovery Unit has sent out a number of
questionnaires to consumers implying that they are under a legal
obligation to complete and return them. One such form, a “Medi-Cal
Estate Questionnaire,” is neither necessary nor legal, and consumers
are advised not to complete it, unless the case is clear, i.e., the
decedent has already transferred the property during life or left no
estate at all. Another form letter is often sent to spouses of deceased
residents asking for the surviving spouse’s social security number and
date of birth. It is not necessary to respond to this letter, either.
Remember, the only legal obligation under law is to send a notice of
death and a copy of the death certificate when a deceased Medi-Cal
beneficiary or the spouse of a deceased beneficiary dies.
See A. above for the notification requirements.
VIII. How Does a Survivor Appeal an Estate Claim?
When a claim seems unavoidable, an applicant still has a number of
options to use in contesting the claim. However, the Recovery Unit has
been particularly lax in meeting regulatory timelines and in applying
the appropriate regulatory standards. Thus, it is next to impossible
for an applicant to really receive a “fair hearing” on the hardship
issue. Claim amounts are often miscalculated, hardship waiver decisions
are delayed for months and are arbitrary and capricious, and collection
representatives are misinformed as to the applicable regulations.
Consumers are advised to complete the hardship application as
completely as possible and to submit substantial documentation to
support any hardship.
A. Hardship Waivers and Estate Hearings: State regulations provide that
the applicant (i.e., the dependent, heir or survivor of the decedent)
may file for a hardship waiver within 60 days of notice of the claim.
The hardship application is provided with the notice of the claim and
the itemized billing, along with a copy of the regulations. A written
decision regarding the hardship application must be sent to the
applicant within 90 days of submission of the application. The
applicant may challenge the Department’s hardship waiver decision by
requesting an estate hearing within 60 days of the date of the
Department’s hardship waiver decision. The estate hearing is an
administrative law hearing and is required to be set within 60 days of
the date of the request and must be conducted in the court of appeals
district in which the applicant resides.
B. Caregiver Exemption: There is currently no legal exemption from
recovery for children of deceased Medi-Cal beneficiaries who lived in
the home continuously for at least two years and provided care that
enabled the beneficiary to remain at home or delayed entry into a
nursing home. However, the Recovery Unit has adopted an unwritten
“policy” to consider such factors in determining hardship.
The applicant must still complete the hardship waiver form and is also
advised to submit adequate documentation that shows that the applicant
provided a level of care for at least two years that delayed the
deceased beneficiary’s entry into a nursing home. This includes a
statement from the doctor or other medical provider attesting to the
deceased’s condition prior to entering the nursing home and what
specific level and frequency of care the deceased received from the
child. Declarations from medical providers, friends of the deceased,
copies of pertinent medical records, etc. can be useful in documenting
the extent of the caregiving provided.
C. Judicial Review: Estate hearing decisions can be appealed judicially
by filing a writ of mandate with the appropriate court. The state may
also refer the claim to the Office of the Attorney General if the claim
is not paid and their collection efforts are unsuccessful.
D. Legal Representation: The hardship waiver and appeal processes can
be complicated and many surviving beneficiaries of the estate cannot
afford legal representation.Frequently, clients who have formed trusts will ask: "How will forming
a trust help the surviving spouse and beneficiaries save on capital
gains taxes in sale of a home?"
Capital gains are generally determined by deducting the "BASIS (tax
cost)" or the depreciated deductions, from the sales price. If the
property is inherited, the new basis is generally the value of the
property at the decedent's death. You should however investigate the
basis with your accountant.
If a property is held in community property, or as community property
in a trust, the basis of the decedent spouse's half is valued on the
date of his or her death. The surviving spouse's basis is then also
changed to the date of death value. Therefore, there will be a double
step-up in basis.
If the property is held in joint tenancy, only one half of the property
basis will be stepped-up. Therefore, one half of the step up in basis
will be lost. The best manner of holding title in each situation is
different, and you should consult an attorney to help you determine
Selling a property once in trust is just as easily accomplished as
selling a property that is not in trust. As in a normal sale, it is
recommended that you use a competent real estate agent. Once an offer
is received, you should then notify the escrow company that title is
held in the name of the trust, and the escrow company will insure that
the grant deed is properly signed.
If you are a successor trustee of a trust, the best way to sell a home
would be to sell it "as is." Although there are limited disclosure
requirements with trusts and estates, you are required to inform the
buyer of what defects you know to exist that you have learned as a
successor trustee. An "as is" sale is not a guarantee for any future
liability. An "as is sale" does however put the buyer on notice that he
or she should conduct a more aggressive investigation of the property
prior to purchase. As in any other sale, the successor trustee of the
trust should offer a home protection policy in favor of the buyer. This
can cost anywhere between $215.00 and $500.00, but is a good gesture on
the part of a seller who wants to quickly sell the property.
More important, if you are a successor trustee of a trust, you want to
insure that an affidavit of death of the previous trustee has been
filed before you enter escrow. This will require that you have a
certified death certificate of the previous trustee, and will help
expedite the escrow procedure.
As with all sales, or legal agreements, as a successor trustee of any
trust, you should have your purchase agreements reviewed by an
attorney, even if you are currently represented by a real estate agent.
Real Estate agents will not give you legal advice regarding the
implications of your actions.
Mina N. Sirkin and Evan R. Sirkin are partners at the Law Offices of
Sirkin and Sirkin. Our practice is
limited to estate planning (Wills, Trusts and Probate), and Medi-Cal Planning and recovery. To set an appointment
by telephone, please call 818.340.4479.
21550 Oxnard Street, Third Floor
Woodland Hills, CA 91367
Phone: 818. 340. 4479
Fax: 818. 340. 7952
West Los Angeles
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Los Angeles, CA 90064
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Irvine, CA 92715
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Los Angeles, CA 90045
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445 N. Figueroa St., Suite 2600
Los Angeles, CA 90071
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Glendale, CA 91203
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Pasadena, CA 91101
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