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Medi-Cal Eligibility Planning
Medi-Cal Recovery Planning
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 estate for the amount of the Medi-Cal benefits paid or the value of the estate, whichever is less.
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 beneficiaries.
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.
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