California’s Medicaid Estate Recovery Program primarily targets assets owned by a deceased Medi-Cal recipient at the time of their death. Under California Welfare and Institutions Code 14009.5, the state is entitled to seek reimbursement for long-term care services provided to the recipient after the age of 55. Senate Bill 833, effective January 1, 2017, narrowed the scope of recoverable assets. Previously, the state could recover from any asset in which the recipient held an interest at death, even those passing outside of probate. Now, recovery is typically limited to assets that go through probate under California law.The most commonly affected asset is real property, particularly a home solely owned by the Medi-Cal recipient. If the property is part of the probate estate, it becomes subject to recovery. Other recoverable assets may include bank accounts, investment accounts, and personal property that must go through probate. However, assets held in living trusts, joint tenancy, or with designated beneficiaries are generally protected from recovery, provided they are structured correctly.In some cases, Medi-Cal recovery can extend to life insurance proceeds and retirement accounts if they are payable to the estate rather than a named beneficiary. If the recipient failed to designate a beneficiary or named their estate, those funds may be subject to claims. Annuities purchased by the recipient may also be recoverable if they lack a properly designated beneficiary. The state’s ability to recover from these assets depends on how they are structured and whether they are considered part of the probate estate.
The responsibility for repaying Medi-Cal benefits lies primarily with the deceased recipient’s estate. Since Medi-Cal recovery is a claim against the estate, heirs and beneficiaries are not personally responsible unless they receive assets that should have been subject to recovery.If the deceased held property or financial accounts solely in their name, the estate must address valid claims before distributing assets to heirs. The executor or administrator is legally required to notify the California Department of Health Care Services (DHCS) of the recipient’s death and facilitate repayment, if necessary. Failure to properly account for the Medi-Cal claim before distributing assets can lead to personal liability for the executor.If an estate lacks sufficient assets to cover the full amount owed, DHCS can only recover what is available. If the estate is depleted due to other debts or administrative costs, the state cannot pursue heirs for any remaining balance. However, if an heir or beneficiary receives an asset that should have been subject to recovery, the state may take legal action to reclaim those funds. Courts have upheld the state’s right to recover improperly transferred assets, emphasizing the importance of proper estate administration.
California law provides several exemptions that can prevent or reduce Medi-Cal estate recovery. One of the most significant exemptions applies to surviving spouses and registered domestic partners. Under California Welfare and Institutions Code 14009.5, the state is prohibited from recovering Medi-Cal costs during the lifetime of a surviving spouse or domestic partner, regardless of the estate's assets. Proper estate planning, such as transferring assets out of the probate estate, can potentially avoid recovery altogether.Another exemption applies if the deceased recipient has a surviving child who is blind, disabled, or under the age of 21. If the child meets the Social Security Administration’s definition of blindness or disability, the estate is fully exempt from recovery. Documentation of the child's condition must be submitted to DHCS to qualify for this exemption.Hardship waivers are also available, allowing heirs or beneficiaries to request relief from Medi-Cal recovery under certain conditions. DHCS evaluates hardship claims based on criteria in Title 22 of the California Code of Regulations 50963, including situations where recovery would lead to significant financial distress or homelessness. For example, if an heir lives in the decedent’s home and lacks the financial means to secure alternative housing, they may qualify for an exemption. Individuals who provided care to the Medi-Cal recipient to avoid long-term institutionalization may also be eligible. Applications for hardship waivers must be submitted within 60 days of receiving the estate recovery claim, with supporting evidence.
When a Medi-Cal recipient passes away, DHCS begins the estate recovery process by sending a formal claim notice to the estate’s executor, administrator, or legal representative. Under California Probate Code 215, estate representatives must notify DHCS of the recipient’s death within 90 days.The claim will detail the total amount Medi-Cal paid for the recipient’s healthcare services, including long-term care costs. DHCS calculates this amount based on payment records and provides a breakdown of the covered services. The estate representative may request an itemized statement to verify the claim’s accuracy. If discrepancies arise, such as charges for services when the recipient was ineligible for Medi-Cal, the representative can dispute the claim. The burden of proof rests with DHCS to substantiate the amount owed.
If an estate or its beneficiaries believe that a Medi-Cal recovery claim is inaccurate or unjust, they have the option to appeal. Under Title 22 of the California Code of Regulations 50965, individuals can challenge recovery efforts by submitting a formal request for reconsideration to DHCS within 60 days of receiving the claim notice. The appeal must include supporting documentation, such as medical records, financial statements, or legal documents.If the reconsideration request is denied, or the estate disagrees with DHCS’s response, they may pursue further recourse through administrative hearings with the California Office of Administrative Hearings and Appeals (OAHA). An administrative law judge will review the evidence and decide whether the claim should be upheld. Legal representation is not required but may be helpful, especially in complex cases. If the administrative decision is unfavorable, the estate can seek judicial review in California Superior Court. However, court challenges can be costly and time-consuming, making early resolution advisable.
Once DHCS establishes a valid claim, it can pursue various legal avenues to enforce repayment. If the claim remains unpaid, the state may file a creditor’s claim in probate court, ensuring that Medi-Cal’s recovery is prioritized alongside other estate debts. Under California Probate Code 9000-9399, creditor claims must be settled before assets are distributed to heirs. If the estate lacks liquid assets, DHCS may seek the sale of estate property, including placing liens on real estate, to satisfy the debt.If probate is not initiated, DHCS can pursue recovery through direct negotiations with heirs or by taking legal action against improperly transferred assets. If an executor or beneficiary distributes assets without addressing the Medi-Cal claim, the state may petition the probate court to recover those funds. DHCS may also collaborate with the Attorney General’s office to handle more complex recovery cases, particularly when fraud or asset concealment is suspected. These enforcement measures highlight the importance of addressing Medi-Cal recovery claims promptly and complying with estate administration requirements.