Wednesday, July 6, 2016


Wonderful news for many people who are on the Medi-Cal program.

California is very generous when qualifying low income and middle class families for Medi-Cal  benefits, but there has been a nasty underbelly to this. California has an extremely aggressive and harsh estate recovery program.

As I have explained before on this blog, under current law there is a very real problem going on where impoverished people are forced to repay the government for the cost of their healthcare with their life savings after they die— often the family home.

I’ve argued that this is unfair for many reasons. One is that if you earn enough to get subsidized health insurance (AKA Obamacare/Covered California) you are not required to pay anything back to the government after you die.

There are studies that point to inherited wealth as the number one factor in climbing the socio-economic ladder from generation to generation. Inherited wealth is a bigger factor than race or education. A government policy to claim the inheritance of impoverished people could affect that family’s ability to climb out of poverty for multiple generations.

Families often have to pay for expensive trusts and other complicated estate planning legal help to avoid this difficult scenario.

Happily, Governor Brown has just signed into law some new legislation that will greatly reduce this burden on California families. Incorporated into the new budget bill are rules that ensures:

  • No recovery on the estates of surviving spouses (time to marry that girlfriend!) 
  • Recovery will be limited to only what is required by federal law, i.e., for those 55+ years of age, nursing home facility and long term care services or any age if the person was “permanently institutionalized." 
  • Waivers of estate claims for homesteads of modest value 
  • The “Estate” from which the state can recover will be limited to the probate estate - thus, living trusts, joint tenancies, etc. will not be subject to recovery (this is HUGE!) 
  • Interest on liens will be limited 
  • Those who could be subject to recovery can receive an itemized billing once a year for a $5 fee. 

The new provisions are effective for those who die on or after January 1, 2017

If your loved one is on Medi-Cal you should still have an elder law attorney familiar with Medi-Cal rules analyze his or her situation and do what needs to be done to avoid recovery. However, with these new laws what will need to be done to protect the family home will likely be much less expensive and involved.


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