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Tuesday, December 10, 2013

ALERT! GO ON MEDI-CAL AND LOSE YOUR FAMILY HOME!




Here is a bit of information that I couldn’t find on the Covered Californa website.   In fact, it didn’t occur to me to look for it until a client recently asked me this question:

"I’m 55 and eligible for the expanded Medi-Cal program.   If I go on the program will the State of California come after my property?”  

When she asked me this simple enough question a few thoughts went through my head:
  •  Before the Affordable Care Act (AKA Obamacare) you could only be eligible for Medi-Cal if you were extremely poor. You couldn’t have more than $2000.00 in assets, in fact. 



  • After Obamacare, there is a lovely thing called “expanded Medi-Cal” which allows anyone under 65 with a low income (regardless of their net worth) to become eligible for health insurance through Medi-Cal. Here is a refresher on the changes to Medi-Cal under the ACA.


  • In fact, the lovely Covered California website will direct you toward Medi-Cal instead of subsidized health insurance if you note a low income on the website form.  


But here is what I could not find anywhere on the Covered California site (although I know they have to tell you somewhere along the way if you actually sign up for Medi-Cal):



If you are over 55 with an income low enough to be eligible for expanded Medi-Cal— your estate WILL be subject to recovery.  
This means that for people between 55 and 65 it isn't simply health insurance:  it is a LOAN.

Oh and by the way, this applies to those of you who live in medicaid states too (Update:  Some states are closing this gap!  Yea Oregon!  Go Washington! Click here to support the California legislation.

Estate recovery means that the State wants a reimbursement for every dollar it spent on your health care while you were alive and, if a home is the only thing in your estate when you die, the home is what will be used to pay.


Hard to believe that the government would make it so easy for you to fall into a trap? It was for me too.  So I looked at the statute.  I felt sure that somewhere Obama and crew had put in a provision saying that if someone over 55 went onto the Covered California site and was directed to Medi-Cal instead of the subsidized programs the government wouldn’t seek reimbursement for their health care from their estate.  After all, for someone right on the edge of eligibility the subsidized program provides health insurance for only $1.00 a month— check below for how I got this number. We know the government isn’t seeking reimbursement for all of those subsidies it is paying. Why would the government waive reimbursement for someone paying just $1.00 a month for their health insurance but demand reimbursement from someone who is too poor to pay even that?

I didn’t see anything in the law that would fill this huge gap.  I checked the other State webpages (www.c4yourself.com not http://www.dhcs.ca.gov) that cover Medi-Cal looking for some information that would confirm that the people between 55-65 were protected, or at least confirm that they are not.  Nothing.

In fact, if you look for the answer to the question “Do I have to pay for Medi-Cal?” in the FAQ section of the State page it gives this answer:

"It depends. If your income is less than Medi-Cal limits for your family size, you will receive Medi-Cal services at no cost to you. If your income is more than Medi-Cal limits for your family size, you will have to pay a certain amount only in the month you have medical expenses. This is called a share of cost.” 
It neglects to mention that your heirs will have to pay for the services you received after the day you turned 55.  I may be asking a bit too much, but I think when someone asks, “Do I have to pay?” they mean them paying as opposed to the government paying not them paying as opposed to their children.  The handy-dandy FAQ section should read:

"It depends. If your income is less than Medi-Cal limits for your family size, you will receive Medi-Cal services at no cost to you, BUT YOUR HEIRS WILL HAVE TO PAY IT ALL BACK OUT OF WHATEVER YOU SAVED YOUR WHOLE LIFE IF YOU RECEIVE ANY BENEFITS AFTER AGE 55. If your income is more than Medi-Cal limits for your family size, you will have to pay a certain amount only in the month you have medical expenses. This is called a share of cost.”


Still hoping I’d just made a mistake and read the code wrong, I wrote to Medi-Cal directly. Here is the emailed response I got:

“Thank you for contacting the Department of Health Care Services (DHCS). Medi-Cal is required to recover the costs of medical assistance provided after the age of 55 from the estates of deceased Medi-Cal beneficiaries….This was not changed as a result of the passage of the Affordable Care Act. Natural and adopted children are treated the same under Medi-Cal.The applicable section of the federal law is Title 42, Unites States Code, Section 1396p(b).”  (The emphasis is mine.)

The DSCS was quick to explained that all of the usual exceptions apply to this type of estate recovery, but neglected to comment on how fundamentally unfair it is to force very poor people ages 55-65 to pay for their health care with their homes while everyone else, from birth to death, is now eligible for either subsidized health insurance or (for those over 65) medicare.



THIS AGE 55-65 MEDI-CAL DONUT HOLE IS SO BIG YOUR HOME COULD FALL THROUGH IT. 


Let me be clear: if you make the right amount to qualify for a subsidized health insurance plan, your costs are going to be shared and subsidized by the government. But if you go on Medi-Cal, you owe the entire amount that Medi-Cal spends on you from the day you turn 55.

If you die owing the State money for any medical services you received in the ten years between age 55 and age 65 when you became eligible for Medicare— your estate will have to pay.  That means your heirs will get a nasty letter from the government saying they own however many thousands of dollars it spent on your behalf and they must pay out of their inheritance.  If your only asset was your home, the State of California will graciously allow them to put a lien against the home in order to pay.

Of course, this is all part of a much larger problem.  As you may or may not be aware, family homes are regularly lost to the government’s reimbursement claims because of the high cost of nursing home care.  Contrary to popular hopes, Medicare does not cover long term nursing home costs.  People must spend their own money on nursing home costs and then, when they are broke, they must go onto Medi-Cal.  I have a post about the eligibility requirements.  When they die, their estate is subject to reimbursement.  Reimbursement is a federal mandated law, folks, so call your Congressperson to complain.

The fact that the government seeks reimbursement from homeowners at all is fundamentally at odds with the American Dream.  Carol J. Wessels, who is an attorney in Wisconsin, makes this great point about using homes as reimbursement for medicaid:

"This causes me to wonder why the state is taking such draconian steps against elderly individuals, just because they had the foresight to invest in the American Dream, a home. An individual who was less frugal, frittered money away and did not invest in a home, would receive the same Medicaid benefits, and not be penalized for being a homeowner. Even more offensive is that as far as I can tell, a homeowner can commit a crime and go to prison, receive food, housing and medical care there, which the State is required to provide, and still come out with no lien on their home. If I am wrong about that, I hope someone will point it out.”
Will Medicaid Recipients Ever be Able to Sell Their Homes Under Wisconsin’s New Budget Law? 

SO BASICALLY, THIS HOUSE SIZED DONUT HOLE TREATS THE FRAIL ELDERLY OF OUR STATE WORSE THAN CRIMINALS 

AND 

COVERED CALIFORNIA ENTICES UNSUSPECTING PEOPLE INTO A PROGRAM THAT COULD RESULT IN THE LOSS OF THE FAMILY HOME. 



I went onto the Covered California website and played around a bit.  This is what I found:

  • If you are an individual that makes less than $15,856 a year the site directs you to Medi-Cal.  It doesn’t seem to even allow you to go forward and purchase coverage.
  • If you are an individual that makes $15,857 a year you can get subsidized coverage at the SILVER level for $1.00 a month here in Santa Cruz (plan availability varies by county).   That is a no-deductible plan everyone.
So, if you are over 55 and earn less than  $15,856 a year, but have a home would you like to ask your children to cough up that $1.00 a month or would you like them to use that home to pay back the State after you die?  I know what I would like to do, but the State doesn’t let you choose.  

AS STRANGE AS IT SOUNDS, YOU HAVE TO PROVE UP ENOUGH INCOME TO QUALIFY FOR GOVERNMENT SUBSIDIES.  

If anyone out there has come up with a solution to the problem of not having enough income to qualify for the Obamacare government subsidies, I’d love to hear it.  One idea of mine is to do a reverse mortgage to slightly increase income but that still means that the poorest of the poor are having to pay mortgage companies fees and interest just to qualify for inexpensive health insurance.  There are also trusts that can act as annuities, basically a way to give yourself a reverse mortgage. Another idea of mine is for an anticipated heir, such as a child, to employ the parent, but this raises tax issues….



Politics and theoretical discussions aside, if you are on Medi-Cal and you own a home, you should contact an Elder Law attorney right away.  It is not good enough to simply go to an Estate Planning Attorney because the Medi-Cal laws are very difficult to understand and those of us that have made the effort are few and far between.

THERE ARE WAYS TO SAVE YOUR HOUSE, BUT THEY REQUIRE YOU TO TAKE YOUR HOUSE OUT OF YOUR ESTATE AND YOU NEED EXPERT ADVICE FOR THAT. 

By the way, if removing your home from your estate to avoid reimbursement causes you to feel guilty, check out my webpage on the topic.



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