Medi-Cal: Health Care Benefit or Expensive Health Care Loan?
SB 1124, authored by Senator Ed Hernandez (D-Los Angeles), passed the Senate on May 28 and will now go to the Assembly Health Committee.
Co-sponsored by CANHR and Western Center on Law and Poverty, SB 1124 is a response to consumer concerns and consumer outrage at being forced to obtain coverage via a Medi-Cal managed care program if their income is too low for Covered California; being denied information as to what the monthly capitated managed care rate might be; and then, when they die, having their estates and the estates of their spouses subject to Medi-Cal recovery because they are aged 55 or older, regardless of what health care services they use.
Even more outrageous is the fact that, for the first three years of the Medi-Cal Expansion program, the costs are paid solely by federal funds, with no state funds involved. Thus, by collecting from this population, the state of California is acting as a collection agency for the federal government.
California’s Medi-Cal Recovery program requires the state to place a claim on the estates of those who received Medi-Cal benefits when they were 55 years of age or older to recoup benefits paid, regardless of the type of medical services received. This mandate is somewhat unique to California, since federal law does not require California to collect for optional benefits for those 55 and over, and federal law does not require California to place claims on the estates of surviving spouses.
Most other states, in an effort to encourage health care enrollment, have eliminated recovery for the 55+ population, unless the person is institutionalized. The result of California’s aggressive Medi-Cal recovery program has been an inordinate burden for the families of California’s low-income Medi-Cal beneficiaries. Attention should be paid to the impact of this recovery:
For most Medi-Cal recipients, the only asset they leave in their estates is a home.
Under both California and federal laws, the home is generally considered an “exempt” asset and can be transferred at any time to avoid recovery on the home altogether.
Low income and minority Medi-Cal recipients are disproportionately impacted by Medi-Cal recovery, not only because they are not adequately informed of their rights regarding the transfer of their homes, but also because they can rarely afford the $300+/hour attorney fees required for adequate estate planning.
This inequitable recovery system results in heirs and family members of deceased Medi-Cal recipients in low-income communities having to sell their homes to pay off the estate recovery claim or sign a “voluntary lien” at 7% interest, so that the state of California can collect on the estate when they die.
Generations of families lose their family homes, simply because they did not know their rights.
The revenues generated by Medi-Cal Recovery purportedly help fund health care benefits for additional beneficiaries. However, the reality is that the overall recovery amount represents approximately 0.1% of total Medi-Cal expenditures, while the impact of California’s recovery program contributes to creating a new generation of beneficiaries by forcing them to sell the family home or make monthly payments while charging usurious interest rates.
Under the current system in California, Medi-Cal is hardly a benefit for anyone over 55 years of age. It is a very expensive health care loan. We need to invest in the future for low-income Californians, and not continue to deny them the right to inherit the family home simply because their parents were not aware of their rights and were too poor to afford health care.
SB 1124 would eliminate most of the optional recovery provisions not required by federal law and allow thousands of older, low-income Medi-Cal recipients to be relieved of the worry about losing their family homes. We need to support SB 1124 and see it signed into law. For more information about SB 1124, please go to: www.canhr.org.
Page Last Modified: July 1, 2013