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Effective Jan. 1, 2017, there is good news for anyone who receives or may receive Medi-Cal benefits. 

Historically, on the death of a Medi-Cal beneficiary and the beneficiary’s spouse, Medi-Cal had the right to recover the value of the benefits it had paid, unless the beneficiary was survived by a disabled child.  This right to recover applied to all benefits paid on behalf of a beneficiary over 55, and all long-term care benefits paid regardless of age. Moreover, Medi-Cal’s right of recovery applied to all of the beneficiary’s assets, regardless of whether they were held in a living trust. The result often proved financially devastating for the beneficiary’s heirs, who were compelled to sell the family home or liquidate other assets to satisfy a Medi-Cal recovery lien.

The new law, signed by Governor Jerry Brown in the fall, dramatically limits Medi’Cal’s recovery rights prospectively. Going forward, Medi-Cal can only recover assets that pass through probate. This means that if an individual dies with or without a will, Medi-Cal can recover against that individual’s property. However, if an individual holds his property in a living trust, in joint tenancy, or in a pay on death (POD) form, the assets are shielded from Medi-Cal.

Under the new law, Medi-Cal will no longer maintain any recovery right if the beneficiary is survived by a surviving spouse or domestic partner, or if the a beneficiary’s home is of “modest value,” meaning less than 50 percent of the average price of homes in the county where it is located.

Applicable to anyone who dies on or after Jan. 1, 2017, this law will make it much easier for Medi-Cal beneficiaries to protect their homes and other assets for their heirs, by establishing a living trust, transferring ownership to joint tenancy or a POD account when available.