Dear Len & Rosie,
I'm a 60 year old woman. I’ve been on Medi-Cal for two years and just received a letter from them about getting reimbursed after I die. I would like to understand this better and to protect my assets (which are fairly modest) as much as possible. I do now own a home, but I have about $170,000 in various investments that I want to protect.
If you are on Medi-Cal and you own $170,000 in countable assets, then you are receiving Medi-Cal as part of the Medicaid expansion adopted by California after the Affordable Care Act (“ACA” or “Obamacare”) was enacted in 2010. The Medicaid expansion opened up eligibility for non-nursing home Medi-Cal benefits for people under age 65 with low income, regardless of how much they own in assets. That’s the good news. You now have health insurance that you would otherwise not been able to afford without spending your life savings.
The bad news is that California is required to assert recovery claims against the assets of Medi-Cal recipients for benefits paid after age 55 or at any age for nursing home care. The letter you received from Medi-Cal, printed on bright yellow paper, is automatically mailed out to every Medi-Cal recipient on an annual basis.
If you do nothing, then when you turn 65, you’ll be enrolled in Medicare and you will lose your Medi-Cal under the ACA. Then, upon your death, the California Department of Health Care Services will assert an estate claim for the money it has spent on you between the date you obtained benefits and age 65 when you will be disenrolled.
The amount of this claim can be substantial, even if you are healthy and you receive little to no medical care, because most Medi-Cal recipients are provided for by managed care agencies for which Medi-Cal pays a monthly premium for each recipient.
What can you do? Not much as this time, unless you are willing to create an irrevocable trust, with someone other than you as trustee, and transfer your assets into the trust now. This creates a dilemma. You can avoid the Medi-Cal estate claim, but only if you give up control over your life savings.
If you were terminally ill or if you need nursing home care, then that may be a good idea, but for now, while you are healthy and independent, we feel that for most people giving up control of their financial lives is too much to pay to avoid Medi-Cal estate claims. For now, we recommend that you have a good durable power of attorney that empowers someone you trust to create an irrevocable trust for you and transfer your assets to it if you should ever become incapaciated.
Len & Rosie
Dear Len & Rosie,