Everyone wants to stay healthy for as long as they live. Unfortunately, many people might need long-term care as they get older – due to a serious disease or an unexpected injury. Data shows that over 13 million people in California rely on Medi-Cal – which is the largest and most comprehensive long-term care program in the country.
If you receive long-term care under the Medi-Cal program, the state will try to recoup the expenses associated with your care from your estate upon death. This can be a problem for many people, since their home is the most valuable asset they own and they might want to leave it to their beneficiaries.
How do you protect your home from getting taken over by the state after your death? Let us take a look.
Medi-Cal Estate Recovery – What You Need to Know
The first thing you should know about the Medi-Cal program is that as a beneficiary, your house is classified as an ‘exempt asset’ – as long as you are alive. Regardless of the expenses associated with your medical care, the state will not initiate the recovery process as long as you are alive.
Once you pass away, the state will try to recover the expenses associated with your medical care by filing a claim on your house – as long as the following conditions are met.
- You were 55 or older when you received Medi-Cal benefits
- The house in question was in your name at the time of your death
- Your estate is subject to probate under the law
If the aforementioned conditions are met, the state will initiate the process of estate recovery and try to recover the expenses associated with your Medi-Cal benefits. In case the total value of your estate is lower than the cost of Medi-Cal benefits you received, the remaining amount is written off by the state.
For instance, if the cost of your Medi-Cal benefits is estimated at $500,000 and the total value of your estate is $300,000, the state will recover $300,000 and the remaining amount will be written off.
How to Avoid Medi-Cal Estate Recovery
As mentioned above, the state is authorized to file a claim against your house only if it is subject to probate. So, before you apply for Medi-Cal benefits, you can implement some estate planning strategies that could help prevent this from happening. For example, you can set up a trust and transfer your house and other assets into the trust, so they can pass directly to your beneficiaries upon death. Since you would no longer own the house, the state cannot file a claim against it even after you pass away.
It should be noted that transferring your house to your beneficiaries can make you ineligible to receive Medi-Cal benefits for a period of 30 months. This is commonly referred to as the penalty period or waiting period.
There are, however, several exceptions to this rule. You have the right to transfer your house to the following people any time you want – without incurring the Medi-Cal penalty:
- Your spouse or partner
- Your son or daughter (biological or adopted) under the age of 21
- Your son or daughter who is blind or permanently disabled (regardless of their age)
- Your sibling who has an equity interest in your house and has lived in your house for a period of one year or longer before you got admitted to the nursing home
- Your son or daughter who lived with you in your house for a period of two years or longer and cared for you before you got admitted to the nursing home
- A disabled person (under the age of 65) who is financially dependent on you
Simply put, if you do not own any assets at the time of your death, the state cannot file a claim against your estate for recovering Medi-Cal expenses after you die.
Need to Protect Your House against Medi-Cal Recovery? Contact Us Today!
At Garmo & Garmo, we understand that your home is not only your most valued asset, but it also has a lot of sentimental value attached to it. We can help you set up a trust and make sure your house does not get taken over by the state after your death.
Our estate planning attorneys have over 70 years of combined experience and have helped numerous clients with their estate plans over the years. We have an in-depth understanding of local, state, and federal estate planning laws and the exceptions to these laws.
We can create an estate plan which takes all your specific and unique needs into account and ensures that your assets are inherited by your loved ones – not taken over by the state – after your death. To know more about protecting your assets against Medi-Cal recovery and to answer any other estate planning questions you may have, call us today at 619-441-2500 or contact us online and schedule a free consultation with one of our attorneys.