New Medi-Cal Recovery Rules for 2017

As those of you who have been to my seminars know, when a person has received Medi-Cal benefits, that person’s estate may be subject to Medi-Cal Recovery. That means the state can recover for the costs of certain services it paid for during the person’s lifetime.

As of January 1, 2017, the rules regarding what services are recoverable and how the recovery works have changed substantially, mostly in favor of the individuals. A few highlights:

• There is no longer any recovery against a surviving spouse (or domestic partner). Under the old rules, a spouse might be able to keep an asset such as the family home, but it would be subject to recovery when the spouse dies.
• For services received when the person is 55 years of age or older, only nursing home and Home and Community Based Services costs are recoverable. This is a substantial change for people using Medi-Cal as their health insurance.
• The amount of interest charged on liens has been reduced.
• The state is required to waive claims for hardship when the estate is a homestead of “modest value” (50% or less of the average price of homes in the county).

Perhaps most significantly, Medi-Cal recovery is now limited to assets in the person’s probate estate. That means that assets that pass outside of probate, including joint tenancy, beneficiary designations, and assets in your living trust, are now exempt from Medi-Cal recovery.

Interestingly, the reason California was able to make this change is that the new rules are the requirements under Federal law for recovery. Prior to this year, California has been recovering more than it was required to.

Does this mean there is no longer a need for Medi-Cal planning? No, because recovery is only half of the picture. You still need to qualify before Medi-Cal will pay for your long-term care, and those rules have not changed. However, planning for protection from recovery has just gotten a lot easier.