Most working adults can qualify for Medicare when they are ready to retire because they have contributed to the program through payroll taxes. But sadly, Medicare doesn’t provide comprehensive medical coverage that will fully pay for the support people require as they age.
Older adults could still end up responsible for a substantial portion of their expenses for rehabilitative support, in-home nursing care or a room in a nursing home if all they qualify for is Medicare. Thankfully, Medi-Cal, which is the California Medicaid program, helps to close the gap between what older adults actually require as they age and what Medicare covers. Those preparing to move into a nursing home often need to apply for Medi-Cal to cover their expenses, which may or may not need to be repaid from their estate after they’ve passed away.
Need-based benefits usually require repayment
Unlike Medicare, which does not require repayment from those who receive benefits, Medi-Cal can and will seek to hold individual beneficiaries or their estates responsible for any disbursements made on their behalf. Every cent paid out on behalf of a Medi-Cal recipient is subject to collection efforts.
It is common for Medi-Cal to bring a claim against someone’s estate after they die in pursuit of the full value of all benefits that they received. Even assets that did not prevent someone from qualifying for Medi-Cal, like a beneficiary’s primary residence, will be vulnerable to potential liquidation after their death. Sometimes, the value of the benefits received through Medi-Cal will be so high that every asset left in someone’s estate could be subject to liquidation, which ultimately means they cannot leave any resources for their beneficiaries and loved ones.
Advanced planning can protect assets
Those who understand how difficult it can be to qualify for Medi-Cal in a moment of personal need and how the state pursues repayment of the benefits paid on someone’s behalf may be able to put together more effective estate plans. Trusts and structured gifts to beneficiaries can minimize how much of someone’s property is vulnerable to estate recovery efforts and can help maximize how much someone passes on to their loved ones when they die.
Learning more about the rules that govern Medi-Cal and probate proceedings in California can help those preparing for retirement or helping their parents prepare for retirements better protect themselves, their legacy and their future financial stability.