Source: Justice in Aging – Mitigating the Harmful Effects of Medicaid Estate Recovery
Who This Guide Is For
If you’re a California resident who has a loved one receiving Medicaid benefits—or you’re planning for your own future long-term care—you need to understand Medicaid estate recovery. This policy allows the state to recover costs from a deceased beneficiary’s estate, potentially forcing families to sell their homes or deplete inheritances meant for children and grandchildren.
This guide is designed for:
What Is Medicaid Estate Recovery and Why Does It Matter?
Medicaid estate recovery is a federal requirement that allows states to recoup money spent on certain Medicaid services after a beneficiary passes away. In California, this means the state can place liens on homes, bank accounts, and other assets to recover costs for:
The problem: Many families don’t learn about estate recovery until after a loved one dies—when it’s too late to plan. The family home, which may have been in the family for generations, can be seized or forced into sale to satisfy the state’s claim.
Real-World Example: How Estate Recovery Affects California Families
Consider Maria, a 78-year-old Sacramento resident who received Medi-Cal benefits for in-home care services over five years. When Maria passed away, the state filed a claim against her estate for $180,000. Her adult daughter, who had been living in and maintaining the family home, was forced to either buy out the state’s interest or sell the property—despite having no other place to live.
Cases like Maria’s happen thousands of times each year in California. Without proper planning, families lose their financial security and generational wealth.
5 Proven Strategies to Protect Your Family from Medicaid Estate Recovery
1. Establish a Living Trust Before Receiving Medicaid
Placing your home and other assets into a properly structured living trust before applying for Medicaid can shield those assets from estate recovery. However, timing is critical—transferring assets within five years of applying for Medicaid can trigger penalty periods.
Key considerations:
2. Use Exemptions and Hardship Waivers
California law provides several exemptions from estate recovery, including:
Important: These exemptions must be actively claimed—they don’t happen automatically. Families need to file proper documentation with the California Department of Health Care Services (DHCS).
3. Consider Life Estate Deeds
A life estate deed allows a Medicaid recipient to retain the right to live in their home for life while transferring ownership to their children or other beneficiaries. This can remove the home from the probate estate subject to recovery.
Pros:
Cons:
4. Advocate for Policy Changes at the State Level
California advocates have successfully pushed for reforms to limit estate recovery. Recent changes include:
Continuing advocacy efforts focus on further limiting recovery to only nursing home care and improving transparency in the recovery process.
5. Work with Specialized Legal Counsel
The intersection of Medicaid planning, estate planning, and probate law is complex. Generic online documents or non-specialized attorneys may miss critical protections that could save your family hundreds of thousands of dollars.
What to look for in an attorney:
How Can I Prepare If My Loved One Is Already Receiving Medicaid?
Even if a family member is currently receiving Medi-Cal benefits, there are still steps you can take:
What Happens During the Estate Recovery Process in California?
Understanding the timeline helps families prepare:
Critical timing note: Families typically have 30-90 days to respond to estate recovery notices. Missing deadlines can forfeit your rights to exemptions.
Common Questions About Medicaid Estate Recovery
Can the state take my house while I’m still alive?
No. Medicaid estate recovery only occurs after the beneficiary’s death. Your home is protected while you’re living, and if your spouse still lives there.
Does estate recovery apply to all Medicaid benefits?
In California, recovery is limited to:
Regular Medi-Cal benefits for doctors’ visits and basic healthcare are generally not subject to recovery.
What if the estate has no assets?
If there are no probate assets, there’s typically nothing for the state to recover. However, the state may still file liens against real property.
Can I appeal an estate recovery claim?
Yes. Families have the right to:
Why California Families Choose California Probate and Trust, PC for Estate Recovery Protection
At California Probate and Trust, PC, we’ve helped hundreds of California families navigate the complex intersection of Medicaid planning, estate planning, and asset protection. Our approach combines:
With offices in Fair Oaks, Sacramento, and San Francisco, we’ve served thousands of California families facing these exact challenges.
Take Action Now: Protect Your Family’s Legacy
Medicaid estate recovery doesn’t have to mean losing your family home or depleting your children’s inheritance. With proper planning and knowledgeable legal guidance, you can protect what you’ve built while still accessing the healthcare benefits you need.
Next steps: