When and What Can Medi-Cal Recover for Medi-Cal Reimbursement from a Recipient’s Estate?

The new Medi-Cal recovery laws came into effect with the recent amendment to Section 14009.5. There have been many changes to the Department’s right to Medi-Cal recovery, with most changes limiting the Department’s right to Medi-Cal reimbursement after death to those who died on or after the Effective Date. The most notable of these changes are as follows:

Former Section 14009.5: The Department is required to seek Medi-Cal repayment after death for most health care services received or monthly managed care premiums paid on behalf of a Medi-Cal recipient.[5]

Current Section 14009.5: The Department may only seek Medi-Cal repayment after death for those services required to be collected under federal law.[6] Under federal law, these services are: nursing facility services, home- and community-based services, and related hospital and prescription drug services.[7] Thus, for individuals who died on or after the Effective Date, the Department’s right to Medi-Cal reimbursement is limited to only a specific set of services received. In contrast, for individuals who died before the Effective Date, the Department will seek recovery for “most” services received.

Former Section 14009.5: The Department must seek reimbursement for Medi-Cal services provided from a decedent’s “estate.” The former Section 14009.5 did not include a definition of the term “estate.”[8] As such, California used the federal definition, which defined “estate” as “all real or personal property in which the decedent had legal title to or interest in at the time of death (to the extent of such interest), including assets conveyed to a dependent, survivor, heir or assignee of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other assignment.”[9] In other words, the Department was permitted to seek Medi-Cal recovery from the living trust or other non-probate assets of a decedent. 

Current Section 14009.5: With the new Medi-Cal recovery laws, the Department may seek Medi-Cal estate recovery from all of a decedent’s real or personal property and other assets in an individual’s probate estate. Since the definition of “estate” is now limited to a decedent’s probate estate only, the Department may not seek reimbursement from any non-probate assets. For example, it would not be permitted for the Department to seek Medi-Cal estate recovery from the living trust assets of a decedent.

Former Section 14009.5: If a decedent is survived by a spouse, the Department cannot make a claim against the spouse for Medi-Cal reimbursement during the surviving spouse’s lifetime (before or after distribution) for the amount of services provided to the decedent.[16] Upon the death of the surviving spouse, however, Medi-Cal had the right to seek reimbursement from the spouse’s estate for the value of services rendered to the original decedent.[17] If the surviving spouse did not receive enough property or assets from the decedent’s estate to cover this amount, then the Department may only recover up to the value of property the surviving spouse actually received.[18]

Current Section 14009.5: If a decedent is survived by a spouse or registered domestic partner, the Department may not make a claim for Medi-Cal reimbursement at any point in time.[19] This is a drastic change from the former Section 14009.5, which required recovery upon the surviving spouse’s death. The current Section 14009.5 also requires application of this exemption to registered domestic partners, which the former Section 14009.5 did not allow.[20]

Former Section 14009.5: The Department may not seek Medi-Cal estate recovery in any of the following circumstances:

1. For any services received before the decedent turned 55 years of age, unless the decedent was an inpatient in a nursing facility;
2. When the decedent was survived by a child who is under the age of twenty-one (21) years; or
3. When the decedent is survived by a child who is blind or permanently and totally disabled within the meaning of the federal Social Security Act.

Current Section 14009.5: The new Medi-Cal recovery laws under the current Section 14009.5 are almost identical to the former Medi-Cal recovery laws under Section 14009.5. The only difference is that the former Section 14009.5 allowed Medi-Cal recovery for inpatient services received while a decedent was at a nursing facility regardless of the decedent’s age. The current Medi-Cal recovery rules do not allow for such recovery, however, and place a full ban on recovery for all services received while the decedent was 55 years of age or younger.

Former Section 14009.5: If the Department finds that enforcement of its claim would result in substantial hardship to decedent’s dependents, heirs, or survivors, the Department must waive its claim in whole or in part.[21]

Current Section 14009.5: The Department’s right to waive its claim for substantial hardship is identical under the current Section 14009.5.[22] But the current Section 14009.5 additionally provides that the Department must find “substantial hardship” when the decedent’s estate is a homestead of modest value, as that term is defined by the statute.[23]

The new Medi-Cal recovery laws, which went into effect in 2017 through an amendment to Welfare and Institutions Code section 14009.5, made many notable changes to the California Department of Health Care Services’ right to Medi-Cal repayment after death for Medi-Cal services provided to decedents while over the age of 55. Notably, none of these changes expanded the Department’s right to Medi-Cal reimbursement, but rather limited its right to the bare minimum of recovery that federal law requires.[24] While these changes do not apply to decedents who died prior to the amendment’s Effective Date of January 1, 2017, for all other Medi-Cal recipients, the amendment to Section 14009.5 is likely a welcome one.