Establishing Medi-Cal Eligibility During Life and Avoiding
Medi-Cal Recovery Claims after death

Two major topics within Medi-Cal concern establishing eligibility for Medi-Cal benefits, and once eligibility is established, avoiding state recovery claims for recipients who have used the benefits but cannot afford to pay the remaining balances that are not covered. Note that these claims are not brought by the state until after the recipient has passed away, thus hindering the rights of the recipient’s family to assets that would have otherwise passed to them.

Establishing Medi-Cal Eligibility

Many clients are under the impression that they cannot receive Medi-Cal benefits because their aggregated amount of assets exceeds the eligibility limit. However, even if an individual exceeds eligibility limits based on this aggregated amount, there are certain techniques available that allow people to bring their resources within the established limits set by the Medi-Cal program. One such technique involves transferring or gifting certain assets to the potential Medi-Cal recipient’s spouse or child. While the general goal is to keep the potential recipient under the $2000 limit, it is important to note that many assets, such as the recipient’s primary residence, are exempt. Thus a client would still be cable to hold title to his or her house without losing eligibility for Medi-Cal. Other exempt assets include the individual’s household furnishings and one automobile. The caveat to transferring or gifting assets is that the individual must show that the asset was transferred exclusively for a purpose other than to qualify for Medi-Cal benefits.

Avoiding Medi-Cal Recovery Claims

Once a person establishes eligibility for Medi-Cal and utilizes Medi-Cal benefits, their estate will become liable for any unpaid balance not covered by the program. Unfortunately, many Medi-Cal recipients are not aware that they can prevent the state from recovering against their estate for balances owed, or at least reduce the amount recoverable by the state, after they are deceased. Since the state generally will not collect any money until the recipient has passed away, it may be advisable to shield certain assets during life so as to prevent them from being recovered against once the recipient is deceased.

Just as with establishing Medi-Cal eligibility, there are also various techniques estate planning attorneys can implement to prevent the state from recovering claims against Medi-Cal recipients and their estates. When implementing these techniques it is important to take into consideration the recipient’s goals, beyond avoiding recovery, for transferring the assets. One potential reason for making sure a recovery claim cannot be made is the recipient’s desire to ensure his or her spouse or children are provided for. Additionally, many recipients desire to make gifts to their children so as to preserve the assets and ensure that their children will receive their anticipated inheritance. There are of course advantages and disadvantages to each method that are beyond the scope of this article.

It should be noted that both establishing Medi-Cal eligibility and avoiding Medi-Cal recovery claims involve planning that may not be appropriate for everyone. Additionally, there are potential tax disadvantages, thus a qualified professional should be consulted before utilizing such techniques. This article is intended to provide basic information, is general in nature, and does not constitute legal advice..

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