Fact Sheet: Medi-Cal
Estate Recovery

If a person uses Medi-Cal to help pay for nursing home care, California is required in many circumstances to seek recovery of costs it paid. Recovery can only take place after the Medi-Cal recipient's death, and can only be from assets owned by the Medi-Cal recipient on the date of death. Only the value of the Medi-Cal recipient's interest is available (for example, a Medi-Cal recipient's 50% joint tenancy interest). Also, a 2006 rule change limits recovery against life insurance policies and retirement accounts to policies and accounts that are payable to the Medi-Cal recipient's estate.

The law provides two important protections from recovery:

There is also no recovery from a person inheriting an asset who is granted a hardship waiver. Among other reasons, a waiver may be granted to a person inheriting an asset who fits within the "care-giving child" exception. Waivers have been difficult to obtain in the past. For more information on the care-giving child exception, see the H.E.L.P. article entitled, Medi-Cal Update: Estate Recovery.

Transferring the home or other capital assets to avoid Medi-Cal recovery may have negative tax consequences and should not be done without consulting with an experienced and capable advisor. In the Medi-Cal context, it is often better for a person not to transfer his or her interest in the home or other assets to anyone, including a spouse, before the person uses Medi-Cal. In addition, before a person transfers his or her ownership interest in the home, the person should discuss with an experienced and capable advisor possible approaches for avoiding a period of ineligibility.

For more information about transferring the home and taxes, see our Your Home and Taxes Nuts and Bolts Guide. We also discuss these issues in our class series.

July 2006