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Estate Claim:

The reason why so many people consider transferring their home or other exempt assets is to avoid the Medi-Cal Estate Claim. After a beneficiary’s death, Medi-Cal may be entitled to recover the value of benefits it has paid. It does this by making a claim against either the estate of the former Medi-Cal beneficiary or the beneficiary’s successor. The amount of the claim is the lesser of the payments for health care services received or the value of the property received by any recipient from the decedent by distribution or survival.

There are two situations when it is mandatory for the states to recover for Medi-Cal payments: when an individual was age 55 or older when she received medical assistance for nursing facility services, home and community-based services, or for other medical assistance at the option of the state; when the state determines, after notice and opportunity for a hearing, that an individual of any age who is in nursing facility cannot reasonably be expected to be discharged.

The claim will be made either on the death of the beneficiary on the latter described situation, no likelihood of returning home, provided that a spouse or disabled child are not residing in the home, and a few other situations. If a spouse or disabled child are living in the home, then the claim will not be made until the death of the spouse or disabled child.

Conclusion:

If a person decides to give all their assets away and does not engage in proper planning, this will result in ineligibility, this will have significant psychological effects, not to mention devastating tax consequences. The average age of someone going into a skilled nursing facility is about 62 years old, with a stroke. At age 80, for example, you have beaten the odds by 18 years, and statistics indicate that death will occur during sleep or after a brief illness. At that age, the odds of having a long-term care need are remote. That doesn’t mean that it is not going to happen to you, but the statistics indicate that it would not. Obviously, your individual health at the current time would dictate whether or not you personally have the likelihood for that to happen to you. The point is, is that it is our policy that this type of planning is not appropriate unless the need for Medi-Cal is well-founded and imminent. In addition, you should consider that welfare programs such as Medi-Cal are always at a risk for attack due to fiscal difficulties.

Keep in mind also that DHS is constantly rewriting regulations governing what is and is not allowable. In fact, proposed regulations are currently being reviewed which if enacted would curb many of the planning opportunities currently available. There are many "Elder Law" Firms promising 100% success rates in qualifying clients for Medi-Cal irregardless of how large their estates are. Do not forget the old saying "If it sounds too good to be true, it usually is." As noted in a March 19, 2004 Sacramento Bee article, one of the state’s largest "asset protection firms" recently had its offices investigated with over 100 boxes of client files seized and accusations that the firm and its clients had defrauded Medi-Cal of over $50 million. Drobny Law Offices, Inc. cautions its clients not to participate in any aggressive asset protection planning without getting a second opinion from an experienced and conservative attorney well versed in all aspects of estate and tax planning and not to fall prey to any firm who promises unrealistic results.

After you have had time to consider the content of article, please call our office to discuss whether you are interested in initiating Medi-Cal planning.