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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 home.

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.