If you or a loved one have received long-term care through Medi-Cal, you may be wondering what happens to your assets after you pass away. Many families are surprised to learn that Medi-Cal can seek repayment from a recipient’s estate, potentially affecting the home and other property left behind. Without proper planning, heirs may face unexpected claims that reduce their inheritance. The good news is that there are ways to protect what you’ve built and keep your assets in the family. By understanding how Medi-Cal estate recovery works, you can take steps now to safeguard your legacy for future generations.
What Is Medi-Cal Estate Recovery?
Medi-Cal provides healthcare coverage for low-income individuals, including long-term care services. When a recipient passes away, the state has the right to seek reimbursement for certain benefits paid on their behalf. This process, known as Medi-Cal estate recovery, allows the state to recover costs from assets left in the deceased’s estate.
In California, recovery typically applies to assets subject to probate, such as homes, bank accounts, and other property owned solely in the recipient’s name. However, assets held in a living trust, jointly owned property, and certain retirement accounts often remain protected. Understanding which assets Medi-Cal can and cannot claim is key to protecting your estate. With the right planning, families can take steps to reduce or eliminate the impact of estate recovery.
What Services Are Subject to Medi-Cal Reimbursement?
Medi-Cal estate recovery applies to certain health care services received after age 55 or at any age for those who were permanently institutionalized. The state may seek reimbursement for costs related to:
- Nursing home care – Skilled nursing facilities and rehabilitation centers
- Home- and community-based services – In-home supportive care, assisted living waivers
- Hospital and doctor visits – If related to long-term care needs
- Prescription drugs – Medications covered by Medi-Cal for qualifying conditions
Not all services are subject to recovery, so reviewing your benefits and planning ahead can help protect your estate.
Who Is Affected by Medi-Cal Estate Recovery?
Medi-Cal estate recovery applies to individuals who received long-term care benefits through Medi-Cal and still have assets when they pass away. This includes those who received care after age 55 and individuals of any age who were permanently institutionalized. Many seniors who relied on Medi-Cal for nursing home care or in-home supportive services may have their estates subject to recovery. As a result, heirs—spouses, children, or other beneficiaries—could face unexpected claims. Planning ahead can help protect assets and ensure they remain with loved ones.
Not all estates are subject to recovery. If a surviving spouse, minor child, or disabled dependent remains, Medi-Cal cannot collect. Additionally, estates with no assets subject to probate, such as those held in a properly structured trust, are generally protected. Planning ahead helps ensure that loved ones inherit without unnecessary financial burdens.
Ways to Avoid Medi-Cal Estate Recovery
Proper planning can help protect your assets from Medi-Cal estate recovery. Here are some common strategies to consider.
Create a Living Trust
A revocable living trust allows you to keep control of your assets during your lifetime while ensuring they pass directly to your beneficiaries without going through probate. Since Medi-Cal can only recover from assets subject to probate, placing your home and financial accounts in a properly structured trust can keep them safe from estate recovery.
Transfer Assets During Your Lifetime
Giving assets to family members before you pass away can prevent Medi-Cal from making a claim against your estate. However, gifting rules can impact Medi-Cal eligibility, so it’s important to plan carefully. Transfers made within Medi-Cal’s look-back period may create eligibility issues, so timing is key.
Use Joint Ownership or Life Estate Deeds
Holding property jointly with the right of survivorship allows it to pass directly to the surviving owner, avoiding probate. Another option is a life estate deed, which lets you retain the right to live in your home while ensuring it transfers automatically to your chosen beneficiary upon your passing. These options help keep your home out of Medi-Cal’s reach.
Consider Exemptions and Hardship Waivers
Certain estates may qualify for exemptions, such as when a surviving spouse is still living. Heirs facing financial hardship may also apply for a waiver to reduce or eliminate recovery claims. Taking proactive steps now can help protect your estate and provide peace of mind for your family.
Start Planning Now to Protect Your Estate
Medi-Cal estate recovery can impact the assets you leave behind, but with the right planning, you can protect your home and savings for your loved ones. At OC Wills & Trust Attorneys, we help families take proactive steps to avoid unnecessary claims against their estate. Don’t wait until it’s too late—contact us today to discuss your options and create a plan that keeps your assets where they belong: with your family.
