How California’s New Medi-Cal Changes Might Affect Your Estate Plan
Medi-Cal is California’s version of the federal Medicaid program. It provides essential healthcare coverage to low-income individuals and families. Administered by the California Department of Health Care Services (DHCS), Medi-Cal assists vulnerable populations, including low-income families, pregnant women, children, individuals with disabilities, and the elderly. Eligibility for the program is based on various factors, such as income, assets, age, and health condition. Once eligible individuals enroll in Medi-Cal, they receive coverage for various healthcare services, including doctor visits, hospital stays, prescription drugs, preventive care, and mental health services.
Estate recovery is an integral part of the Medi-Cal program. When a Medi-Cal recipient passes away, the state will try to recover the medical expenses incurred on their behalf from the individual’s estate. The primary purpose of estate recovery is to ensure the sustainability of the Medi-Cal program and offset some of the expenses incurred in providing medical care to beneficiaries. By recovering funds from the estates of deceased recipients, the program can continue to serve other eligible individuals in need of medical assistance.
Families are often shocked to learn that the program can take away some of their loved one’s estate after death. However, Medi-Cal recipients and their families can take proactive steps to protect certain assets from recovery during estate planning. An experienced California trust lawyer can help you protect your assets from estate recovery.
Changes to Medi-Cal
The amendment to Welfare and Institutions Code section 14009.5, which took effect in 2017, introduced significant modifications to Medi-Cal recovery laws. These changes affect the California Department of Health Care Services’ (DHCS) authority to seek repayment for Medi-Cal services provided to deceased individuals over the age of 55.
Fortunately for Medi-Cal recipients, these new laws did not expand the DHCS’s right to Medi-Cal reimbursement. Instead, they limited recovery to the minimum required by federal law. The intention behind these changes was to strike a balance between ensuring the sustainability of the Medi-Cal program and protecting the interests of beneficiaries and their families.
It’s important to note that these changes are not retroactive and do not apply to descendants who passed away before the amendment’s effective date of January 1, 2017. However, for all other Medi-Cal recipients, this amendment to Section 14009.5 is likely seen as a positive development.
By restricting the DHCS’s right to recovery, the amended law provides greater protection to the estates of deceased Medi-Cal recipients. This change offers relief to beneficiaries and their families, as they can now retain a larger portion of the estate, ensuring that the intended beneficiaries receive more of the assets.
For Medi-Cal recipients who passed away after January 1, 2017, the amended Section 14009.5 establishes clearer guidelines on the extent of the DHCS’s right to recovery. This clarity allows individuals and their families to plan their estates more effectively, understanding the potential impact of Medi-Cal reimbursement on their assets.
Why Your Property Needs To Be in a Trust
Ensuring your property is in a trust can be a strategic move to avoid or minimize Medi-Cal estate recovery. By placing your property in a trust, you may be able to protect those assets from being subject to estate recovery.
Property held in a trust typically avoids probate. By avoiding probate, your estate can maintain privacy and avoid the scrutiny that comes with a public court process. Additionally, probate can be time-consuming and expensive, and a trust can help streamline the transfer of assets to beneficiaries.
Medi-Cal estate recovery typically targets assets that pass through probate. By placing your property in a trust, it may not be considered part of your probate estate and, therefore, could be shielded from Medi-Cal recovery efforts.
If you anticipate the need for long-term care and the potential use of Medi-Cal benefits, planning ahead with a trust can be a crucial part of your long-term care strategy. By establishing a trust well in advance, you may have a better chance of protecting your assets for your heirs.
How Our Estate Planning Lawyers Can Help
One of the primary methods to protect assets from Medi-Cal recovery is by setting up an irrevocable trust. An estate planning lawyer at our law firm can help you establish a Medicaid Asset Protection Trust (MAPT) or another type of irrevocable trust that legally transfers ownership of your assets to the trust. As the trust’s creator, you can still receive income or benefit from the assets while protecting them from estate recovery.
We can also advise you on strategic gifting to reduce your estate’s value and, consequently, the assets subject to recovery. Our trust attorneys can guide you on the appropriate gift-giving limits and timing to optimize the benefits of gifting while adhering to relevant tax laws and regulations.
If you already have an existing estate plan, an estate planning lawyer at our law firm can review it to identify potential gaps or areas that may be susceptible to Medi-Cal recovery. We can suggest necessary adjustments to enhance asset protection.
Medi-Cal estate recovery rules can be complex and may be subject to change again in the future. Our estate planning lawyers stay up-to-date with current laws and regulations, ensuring that your estate plan complies with all relevant legal requirements.
Contact Our Estate Planning Lawyers Today
Medi-Cal laws and regulations can be complex and subject to change. To ensure your trust is structured effectively to achieve your goals, consult an experienced California estate planning attorney at our law firm today. Call us today at 925-320-7077 for a consultation and review, or fill out our confidential contact form.
John Park is a highly experienced attorney in estate planning, probate, business law and guardianship to help people organize the elements of their lives through careful estate planning and asset protection measures.