Saving Your Family Home,
What You Should Know About Medi-Cal and Estate Claims
A Rare Victory
On September 8, 2001 four years after the Department of Health Services issued
a $29,000 estate claim against the modest home that Carole Braden of Lakeport
shared with her mother for many years, the Department finally waived the claim,
granting Carole a rare "hardship waiver." Thanks to Carole's
tenacity and the legal skills of her attorney, Andy Rossoff, Directing Attorney
at Senior Legal Services in Lakerport, Carole won a victory.
Although Carole had been her mother's primary caregiver during the final
10 years of her mother's life and clearly met the state's requirements
for a hardship waiver, the state refused to budge, forcing several administrative
and judicial appeals. Only after an appeal by the Senior Law Project resulted
in a ruling by the Lake County Superior Court that the state should reconsider
its decision did the state finally grant a waiver.
Many others are not so fortunate, if that is a word one can use for a prolonged
fight to save the family home after you've provided care to your parents
that saved the state literally hundreds of thousands of dollars in costly nursing
home care. Most counties don't have an Andy Rossoff (whose services are
free to seniors and who spent countless hours on research and drafting) and
many clients are too intimidated to fight for their rights.
Exempt During Life, But Estate Claim After Death
Over 64% of the residents of California's nursing homes have all or
part of the costs of their care paid for by the Medi-Cal program. Thousands
of other disabled and frail consumers receive Medi-Cal while living at home
or in a community based setting. Since Medi-Cal beneficiaries cannot have more
than $2,000 in liquid assets, many only have a home or an interest in a home
when they die.
What many Medi-Cal recipients don't realize is, if they leave their
names on their homes when they die, their homes will be subject to an estate
claim. The Department of Health Services is permitted to pursue claims
against the estates of deceased Medi-Cal beneficiaries who were 55 or older
or who lived in a nursing home for recoupment of Medi-Cal monies spent on care,
whether its for nursing home care or out-patient care. Living trusts, joint
tenancies and tenancies in common, while helpful in avoiding probate, are not
protected from Medi-Cal estate claims.
Avoiding Estate Claims
What consumers also don't realize is that estate claims can be avoided
by prudent planning. Under both state and federal laws, most Medi-Cal beneficiaries'
homes are exempt for eligibility purposes while they are alive. State
and federal laws permit beneficiaries to transfer exempt assets, including a
Contrary to popular myth about Medi-Cal, there is no 30 month "waiting
period" for transferring an exempt asset even a home.
In fact, federal and state laws specifically permit the transfer of a home to
a spouse; a minor, blind or disabled child; to a son or daughter who has lived
in the home for at least two years prior to the person's entry into a nursing
home and who provided care which enabled the parent to live at home; or to a
sibling with an equity interest who has lived with the beneficiary for at least
one year prior to entry into a nursing home.
Even if no one lives in the home, if the Medi-Cal application notes "yes"
that the person intends to return home, the home is exempt and can be transferred.
If the home is transferred while the Medi-Cal beneficiary is alive, there is
no estate claim on the home.
Take Care if Transferring a Home
Transferring the home outright is rarely recommended, as inter vivos (during
life) transfers of property can result, not only in loss of control over the
home, but in substantial capital gains taxes. Nursing home residents,
in particular, already stripped of most of their independence, are often reluctant
to completely relinquish control of their property.
However, there are still a number of ways in which Medi-Cal recipients can
avoid probate, tax consequences and estate claims, while still retaining some
control over their property. Planning vehicles such as irrevocable life estates,
occupancy agreements and certain kinds of trusts can meet some or all of the
above considerations. Anyone considering a real estate transfer should consult
a qualified attorney who is knowledgeable about Medi-Cal and property transfers.
The best way to avoid a Medi-Cal estate claim is not to have anything in the
estate when the Medi-Cal beneficiary dies. Unfortunately, many people who are
elderly, poor, who don't know their rights, who were given misinformation
or who simply can't afford to pay an attorney $200 an hour, tend not to
transfer their homes during life. These are the people whose heirs and
beneficiaries are stuck with estate claims.
If you want to avoid an estate claim, call the CANHR office for an
appropriate referral in your area. California consumers can call CANHR's
toll-free number for information on estate claims and waivers and, most
importantly, how to prevent them in the first place: 1-800-474-1116.