Medicaid is a need-based government insurance program. Some funding and regulations come from the federal government, but the programs operate on a state-by-state basis. The California Medicaid program, Medi-Cal, provides health insurance coverage for vulnerable people in a host of different circumstances.
Retired and financially vulnerable older adults often apply for Medi-Cal when they pay for long-term care. While adults typically have Medicare coverage for basic expenses, Medi-Cal coverage may be the only way for someone to pay for in-home nursing services or a room in a nursing home.
Does an applicant requesting medical coverage need to worry about the program laying claim to their home in the future?
Homeownership could be at risk after someone dies
The value of someone’s primary residence could be their single biggest personal asset. Many older adults breathe a sigh of relief when they learn that their home equity does not count against them when they apply for Medi-cal.
The state looks at other countable assets, such as what funds they have in a bank account. Someone who owns their own home could qualify for Medi-Cal benefits in their golden years to pay for their long-term care needs. However, the lenient attitude toward the house ends after the person receiving benefits dies.
Federal Medicaid rules require that every state attempt to recoup long-term care benefits after recipients die. Medi-Cal therefore has an estate recovery program that seeks to intercept someone’s assets in probate court. Resources that belong to someone’s estate, including the home where they lived, are at risk of liquidation after their death to repay medical benefits that they received during their life.
Even if the person who needed coverage specifically planned to leave their home to family members and included clear terms describing that wish in a will, the Medi-Cal estate recovery program could still intercept the home and prevent their family members from assuming ownership over the property.
Those who believe that they might eventually need Medi-Cal benefits as they age may benefit from planning carefully. Long-term care planning could include efforts at asset protection, such as transferring one’s residence to a trust. There could be other strategies as well that could help preserve the equity in someone’s home after their death if they receive Medi-Cal coverage. Ultimately, understanding benefit repayment rules may help California adults better prepare for the possibility that they could require long-term care coverage as they age.