Estate Recovery and Liens
Under Medi-Cal law, following the death of the Medi-Cal recipient the state must attempt to recover from his or her estate whatever benefits it paid for the recipient’s care. However, no recovery can take place until the death of the recipient’s spouse, or as long as there is a child of the deceased who is under age 21 or who is blind or disabled.
While states must attempt to recover funds from the Medi-Cal recipient’s probate estate, meaning property that is held in the beneficiary’s name only, they have the option of seeking recovery against property in which the recipient had an interest but which passes outside of probate. This includes jointly held assets, assets in a living trust, and some life estates. California has opted for the broader option of recovering from non-probate property as well as probate assets.
Given the rules for Medi-Cal eligibility, the only property of substantial value that a Medi-Cal recipient is likely to own at death is his or her home.
In addition to the right to recover from the estate of the Medi-Cal beneficiary, state Medi-Cal agencies must place a lien on real estate owned by a Medi-Cal beneficiary during her life unless certain dependent relatives are living in the property. If the property is sold while the Medi-Cal beneficiary is living, not only will she cease to be eligible for Medi-Cal due to the cash she would net from the sale, but she would have to satisfy the lien by paying back the state for its coverage of her care to date. The exceptions to this rule are cases where a spouse, a disabled or blind child, a child under age 21, or a sibling with an equity interest in the house is living there.
California Rule: In California, no lien may be imposed where an applicant for MediCal states that they intend to return to the home.