Medi-Cal Recovery Law Changes Emphasize Importance of Living Trust

The year is nearly half over and it’s been a rollercoaster. A fluctuating market, rising interest rates, chaos and scandal in Washington. Here on the homefront, it’s summer, and that means baseball. But for loyal A’s and Giants fans, it seems like our favorite teams just can’t catch a break. The All-Star break has come and gone, and it it didn’t provide that spark that we hoped might occur.

Time for some good news: Important changes to Medi-Cal laws

Prior to January 1, 2017, California laws allowed Medi-Cal, California’s version of the federal Medicaid program, to recover expenses from recipients 55 or older, regardless of when their benefits were received. In the past, the state would send the heirs or survivors a claim requesting payment for the benefits paid on behalf of the deceased. Needless to say, receiving a bill from Medi-Cal while grieving the loss of a loved one was an unwelcome shock to many families.

Now, however, ­­thanks to new amendments to the Medi-Cal regulations SB 33 and SB 833, the agency has reduced the ability to recover from those who died after January 1, 2017.

The following changes to Medi-Cal claims are now in effect:

• Claims on the estates of surviving spouses and registered domestic partners are prohibited.
• Claims on the estate are limited to nursing-home care and home, community-based services and hospital or prescription-drug services while receiving these services.
• The state is required to waive the claim completely when the estate that is subject to recovery is a homestead of modest value—a home whose fair market value is 50% or less of the average price of homes in the decedent’s county.
• Claims on life insurance with one or more named beneficiaries are prohibited (unless a probatable estate is named as the beneficiary). A probatable estate is one in which assets are held in the decedent’s name alone.
• Claims on retirement accounts with one or more named beneficiaries are prohibited (unless a probatable estate is named as the beneficiary—an estate is one in which assets are held in the decedent’s name alone.)
• Recovery is limited to only those assets subject to California Probate. This means that assets transferred through a Living Trust, joint tenancy, right of survivorship and life estates are no longer subject to recovery.

What this means to you: If your assets are held in a Living Trust—not in your name—they’re protected from Medi-Cal

As a Medi-Cal recipient, this meant that when planning your estate, you want to have nothing in your name at the time of your death. Having a Will is not sufficient protection. But holding property and liquid assets in a Living Trust protects these assets from recovery by Medi-Cal and ensures that your estate, for which you worked so hard, will pass to your heirs as you intended.

California Document Preparers helps our clients prepare Living Trusts every day. As part of this process, we assist you in deeding real property into your Trust. Contact one of our three Bay Area offices for an appointment today, and we can answer your questions. Best of all, there’s no charge for our time, and we charge one flat fee for our complete estate-planning portfolio that includes the Living Trust, a Pour-Over Will, Power of Attorney and Advance Healthcare Directive. We’re helpful, compassionate and affordable.