An Overview of Medi-Cal Estate Recovery
If you obtain Medi-Cal eligibility to pay for a stay in a nursing facility, Medi-Cal would be required to seek reimbursement from your estate. This is called estate recovery, and we will explain how it works in this guide.
Countable vs. Non-Countable AssetsThere is a $2000 Medi-Cal asset limit. You may wonder why anyone would worry about estate recovery when you can’t qualify if you have more than $2000 in your name.
They can try, but there would be nothing to take, right?
This is a logical assumption, but there are some assets that do not count. These would include your furniture and other household items, personal effects, your wedding and engagement ring, and one motor vehicle.
Medicaid would not go after these items, but the one piece of property that is not counted that would be in play is a home. You can qualify for Medi-Cal while you are the owner of a home, and there is no equity limit in our state.
Medi-Cal LienThe program could place a lien on your home if you are in direct personal possession of the property at the time of your passing, but there are exceptions. If you are married and your spouse is still living in the home, Medicaid would not be able to touch the property.
This would also be the case if there is a minor child, a permanently disabled or blind adult child, or a sibling with an ownership interest residing in the home.
There is a caveat with regard to the exemption for a sibling. It applies if the sibling with an equity interest had been living in the home for at least a year before the death of the Medi-Cal beneficiary.
Medi-Cal Look-Back PeriodYou can be proactive about estate recovery prevention when you are developing a nursing home asset protection plan. If you convey your home into an irrevocable trust, it would not count if you apply for Medi-Cal, and it would be protected during recovery efforts.
However, you have to act in advance, because there is a 30 month look-back period. The home must be placed into the trust at least 30 months before you apply for coverage.
In addition to a home, you could put other resources into the trust with future Medi-Cal eligibility in mind. If there are income-producing assets in the trust, you could receive distributions of the earnings until and unless you apply for Medi-Cal.
Caregiver Child ExemptionThere is another way that you can potentially keep your home in the family.
If an adult child has been caring for you in your home for at least two years before you enter a nursing facility, you could give the home to the child. The look-back would not apply, and Medicaid recovery would not be a factor.