California Budget Limits Medi-Cal’s Ability to Seize Estates

When you pass on, you probably hope to distribute whatever assets you have left to your family and friends. But did you know that the State of California might end up seizing your estate depending on what sort of healthcare benefits you received from the government before you died?

Many people enrolled in the state’s Medi-Cal program do not realize that without a proper estate plan in place, they may end up leaving nothing to their family and friends because the state will take and sell off all their possessions to pay itself back for money it spent on healthcare costs.

Fortunately, starting January 1, a new provision included in the recent state budget will limit the ability of the state to seize estates.

Federal law requires the state to take what assets it can from the estates of people who have died after getting certain medical benefits from the government, specifically nursing home care, hospital care, and related prescription drug costs, if the deceased person was 55 or older when the state paid for their care. This is not changing.

What is changing is the California law that went beyond the federal law and sought repayment for virtually any Medi-Cal costs paid on the deceased person’s behalf. Over the past couple of years, this became a much bigger issue than it had been in the past since more people joined the Medi-Cal program, thanks to Obamacare.

Since there are more people in the Medi-Cal program, more families were getting bills in the mail after their loved ones died claiming that the state was owed money. Due to this more wide-spread awareness, there was enough pressure on the state to roll back its collection efforts to match what is required by the federal government.

This was amplified by the fact that estates were being seized even if the Medi-Cal recipient hadn’t even visited the doctor.  Merely enrolling in the program under Obamacare constituted as a cost to the government, and monthly premium payments were included in this cost.

Ending this unpopular program makes a lot of sense because Medi-Cal was the only government assistance program that required users to pay back more than what federal law requires. In addition, some anecdotal evidence suggested people were going without healthcare because they didn’t want to risk having the government seize their estate, and some family members were being evicted from their long-time family homes after their loved ones died because the home needed to be sold to pay off the estate seizures.

To be clear, the federal law is still in place. Unless you have a proper estate plan, you may still end up having your estate seized to pay back the government for covering certain medical bills.

If you have questions about what you can do to make sure your family and friends inherit your property after you pass away, don’t wait.  Contact an experienced estate planning attorney that can help you make sure your assets end up in the hands you intend, not in Uncle Sam’s pocket.



Brian Chew, the managing partner of OC Wills & Trust Attorneys, has extensive experience in the areas of estate planning, asset protection planning, business succession planning, long-term care planning, and veterans’ benefits. By devoting his practice to estate planning matters, he has founded a firm that strives to provide exceptional service to their clients by working closely with individuals and their families to create comprehensive and customized estate plans. For the past twenty five years, Brian has served thousands of clients in the matters of estate planning, wills and trusts. If you have any questions about this article, you can reach Brian Chew here.