Did You Know?
...that you can transfer your home
even if you are on Medi–Cal?
Many Medi-Cal beneficiaries worry that the state will take their family home after they die. While it is true that the state can recover Medi-Cal costs after a Medi-Cal beneficiary dies, the state can only do so if there is something left in the "estate." If there is nothing left in the estate, there will be nothing that the state can collect. For most people on Medi-Cal, the main asset they own is a home. An estate claim can be avoided if the Medi-Cal beneficiary transfers the home while he or she is still living.
Planning tools such as an irrevocable transfer with a retained life estate or an occupancy agreement allow the person on Medi-Cal to avoid probate and capital gains taxes, in addition to avoiding an estate claim, while retaining some control over the property. There is no 30-month waiting period before someone can do this, since a principal residence is considered an exempt asset. A person on Medi-Cal can transfer the home at any time without affecting Medi-Cal eligibility to any of the following people:
- ANYONE, as long as the home was exempt at the time of the transfer. In California, the home remains exempt simply by the person on Medi-Cal stating on the application or in writing his or her intent to return home. (W"I § 14006)
- A spouse (42 USC § 1396p(c)(2)(A)(i))
- A minor, blind, or disabled child — even if they don’t live in the home (42 USC § 1396p(c)(2)(A)(ii))
- A sibling with an equity interest in the home who has lived in the home for at least a year immediately before the Medi-Cal beneficiary went into a nursing home (42 USC § 1396p(c)(2)(A)(iii))
- A son or daughter who lived in the home for two years immediately before the beneficiary entered a nursing home and provided the beneficiary with care during that time that allowed the beneficiary to remain at home (42 USC § 1396p(c)(2)(A)(iv))
Transfers of property can be complicated and carry potential tax consequences. Anyone contemplating a property transfer should consult a qualified attorney who is knowledgeable about Medi-Cal and property transfers.