On January 1, 2017, new legislation took effect which greatly restricts Medi-Cal recovery. For MediCal recipients who die on or after January 1, 2017, recovery is now largely limited to only those assets subject to California Probate administration.

Under the old law, the only way to avoid recovery was to have nothing left in the Medi-Cal recipient's name at the time of death. The State could not recover until the surviving spouse of the Medi-Cal recipient died. At that time, the State could recover from whatever was in the Medi-Cal recipient's estate that was left to the surviving spouse, via, community property, joint tenancy, living trust, or under a will.

Starting January 1, 2017, (under the new law) recovery is limited to those estates that are subject to probate administration. Conversely, assets transferred via living trusts, joint tenancies, survivorship and life estates will no longer be subject to recovery.

It is a common misconception that having only a Will precludes probate administration – the opposite is true in California. If the gross assets of a decedent's estate exceed $150,000, a Will must be admitted to Probate – and the Estate will be subject to Medi-Cal recovery. Setting up a living trust is more relevant now than ever before.

For example, if John dies after January 1, 2017, and leaves his home under his Will to his children, his estate will be subject to Probate (if the gross value of his home is $150,000 or more). And – the home will be subject to a Medi-Cal recovery Claim. But if John had left the home in a living Trust which avoids Probate administration, there would be no recovery.

The new law also changes what is recoverable, and what is not. For example, Medi-Cal can no longer recover for most basic health services such as doctor's visits, prescription drug costs or managed care reimbursements. But Medi-Cal recovery is still applicable to payments made for skilled nursing home care, home- and community-based services, and hospital and prescription drug services received when the member was an inpatient in a skilled nursing facility.

To learn more about the new Medi-Cal rules, click here to visit the CA Department of Health Care Services' website.