Why We Need to Pass SB 1124
SB 1124 (Hernandez), which includes the most important Medi-Cal Recovery changes since 1993, is a response to consumer concerns 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.
SB 1124 would limit recovery for those age 55 and older to what is required by federal law – e.g. nursing facility, home and community based services and related hospital and prescription drug services and eliminate optional recovery. SB 1124 would also eliminate recovery from the estate of a surviving spouse of a deceased Medi-Cal beneficiary and restrict recovery amounts to benefits paid for services actually received or capitated monthly rate, whichever is less.
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. Most other states, in an effort to encourage health care enrollment, have eliminated recovery for this population.
Federal law does not require California to collect for optional benefits for those 55 and over. Federal law does not require California to place claims on the estates of surviving spouses. While other states have limited recovery to long term care and institutional services, California has maintained one of the most aggressive recovery programs in the country.
This aggressive Medi-Cal recovery program has resulted in uninsured citizens being reluctant to sign up for the Medi-Cal expansion program when they realize that their estates could be subject to Medi-Cal recovery. California’s recovery program has also placed an inordinate burden on the families of California’s low-income Medi-Cal beneficiaries.
- For most Medi-Cal beneficiaries, the only asset they leave in their estates is a home.
- Under both California and federal law, 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 beneficiaries are disproportionately impacted by Medi-Cal recovery, not only because they are not adequately informed of their rights regarding the transfer of their homes, (information is rarely sent in a language other than English), 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 beneficiaries 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.
The cost of California’s Medi-Cal recovery program far outweighs the benefits. Generations of families lose their family homes, simply because they did not know their rights or could not afford estate planning services. The reality is that 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, 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 passed the Senate and is now in the Assembly. The challenge is to get the bill through Assembly Appropriations and to convince the Governor to sign it. Your Assembly Members need to hear from you and from your clients who have been caught up in the Recovery. Call, write or fax your Assembly Member today and tell them how important SB 1124 is to the future of California.