Estate Recovery

The Estate Recovery Program was created to recoup the cost of MC services received after 55 years old from the estate of a deceased MC client. Beginning January 1, 2017, the Estate Recovery Program will only recoup the cost of certain services from deceased clients who were receiving benefits in a Long Term Care, or Home and Community based program.

After receiving notification regarding the death of a person who received MC benefits, the Department of Health Care Services (DHCS) will decide whether or not the cost of services must be paid back. In making this decision, DHCS will consider how much was paid by MC and what is left in the estate of the deceased MC client. Regardless of what is owed, DHCS will never collect more than the value of the assets owned by the MC client at the time of his/her death.

Estate Recovery Claims

DHCS Estate Recovery Unit cannot file any estate claim for reimbursement of benefits properly paid until after the death of the MC client.

The Estate Recovery Unit makes a claim against the estate of deceased clients for the amount of MC paid services received on or after the client’s 55th birthday. The claim is limited to the fair market value of the client’s assets at the time of death less any encumbrances, or the amount of the medical services paid by MC, whichever is less.

Reminder: The amount of assets exempted under the provision of California Partnership for LTC is exempt from estate recovery.

Claims Included in the Estate Recovery for Clients Who Pass Away

On or before December 31, 2016 and services were...	On or before December 31, 2017 and services were...
Nursing facility services	Nursing facility services
Home and community based services	Home and community based services
Related hospital and prescription drug services	Related hospital and prescription drug services when the MC client was receiving nursing facility services and/or home and community based services
Health insurance premiums, including Medicare Part A and B and Delta Dental Premiums

Claims that are Not Included in the Estate Recovery

DHCS’ claim does not include the following health care services paid on behalf of the deceased MC client:

In-Home Supportive Services (IHSS) are not included if the MC client passed away after September 1, 2000,
Cost of Medicare premiums, co-payments, and deductibles paid on behalf of clients only receiving Medicare Savings Programs including Qualified Medicare Beneficiary (QMB),
Specified Low-Income Medicare Beneficiary (SLMB) or Qualified Individual (QI), since the clients are not entitled to, or receiving, any MC services which are subject to recovery.

Notification of Client’s Death

When an MC client passes away (or the surviving spouse of the MC client passes away), the person handling the assets of the deceased client must provide written notice of the death within 90 days. The notice and a photocopy of the death certificate must be sent to DHCS.

All other questions regarding Probate and Estate Recovery, including Hardship Waiver requests are to be referred to the DHCS Estate Recovery Unit.

Department of Health Care Services Estate Recovery Unit, MS 4720
P.O. Box 997425
Sacramento, CA 95899-7425
Phone: (916) 650-0490
Fax: (916) 650-6584

Note: A phone call or written notice to the County, Social Security Administration, or the Office of Vital Statistics, does not satisfy this requirement.

Claims that DHCS May Not Pursue

Once the notice is received, DHCS makes its claim against a client's probated estates within four months. DHCS may NOT make a claim:

During the life time of the surviving spouse or domestic partner.
For services provided before the MC client’s 55th birthday.
If there is a surviving child who is under 21 years old.
If there is a surviving child of any age who, as of the date of DHCS’ claim, is blind or disabled.
For assets that are not subject to probate.

When the surviving spouse passes away, MC may bill the estate of the surviving spouse for the lesser of:

The amount paid by MC for medical assistance, or
The value of assets received by the surviving spouse.

Definition of Estate for Clients Who Pass Away on or Before December 31, 2016

An estate is defined as those assets owned by the MC client at the time of death, including assets distributed through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement. DHCS will issue regulations at a later time to specify what includes “other arrangement.”

Most assets (i.e., home, real property, or bank accounts), considered exempt during the eligibility process, are not exempt from Estate Recovery once the MC client passes away, if the property is still in the client’s name.

Definition of Estate for Clients Who Pass Away on or After January 1, 2017

For MC clients who pass away on or after January 1, 2017 recovery is limited to real property, personal property, and other assets in the MC client’s probate estate against which DHCS is required by federal law to assert a claim.

DHCS Informing Notice

DHCS sends the “Important Notice Regarding The Medi-Cal Estate Recovery Program” (DHCS 9060) twice a year to all MC clients informing them of the Estate Recovery program and informing them that MC may make a claim against any assets owned by the MC client at the time of his/her death.

The “Medi-Cal Estate Recovery Program” Brochure (DHCS 9059) must be provided in all MC Intake packets.

Access to Estimated Recoverable MC Expenses

Clients at or over 55 years old or permanent in-patient clients in nursing or long term care facilities may request a copy of the amount of MC expenses that may be recoverable upon the MC client’s death.
This statement may be requested once a year for a fee.

Hardship Waiver

On or Before December 31, 2016

Any person affected by the estate recovery claim can file for a hardship waiver. The Estate Recovery Unit will waive or reduce its claim if an individual can establish that an undue hardship exists due to the enforcement of the claim. Undue hardship usually exists only in “very limited financial circumstances”.

On or After January 1, 2017

DHCS may waive or reduce a claim against the estate of an MC client if enforcement of the claim would result in substantial hardship to other dependents, heirs, or survivors of the MC client.

Subject to federal approval, DHCS may waive a claim if the estate is considered a "Homestead of Modest Value". A "Homestead of Modest Value" is defined as a home with a fair market value of 50 percent or less of the average price of homes in the county where the homestead is located as of the date the MC client passed away.

Application for Hardship Waiver

For consideration of a waiver or reduction, an applicant must submit an “Application for Hardship Waiver” within 60 days of the date of DHCS’ claim. DHCS includes an application with information regarding how to apply for a waiver when a claim is first presented. If the application for waiver is denied, the applicant then has appeal rights through an estate hearing. The procedure for obtaining a hardship waiver and the criteria for DHCS to grant a waiver are outlined in MC regulations, refer to Title 22, California Code of Regulations (CCR), Section 50960.

Liens

When an MC client enters a Long Term Care (LTC) facility, DHCS may record a lien against the client’s principal residence and request that the property be sold; unless:

The MC client or the client’s personal representative declares intent to return home, even if the return is not likely,
There is a surviving spouse, dependent relative, or co-owner residing in the home,
There is a surviving child of any age who is blind or disabled as defined by Section 1614 of the Federal Social Security Act,
There is a surviving child under 21 years old, or
A sibling with equity interest in the home resided in the home for one year immediately before the date of the client’s admission to the medical institution and continues to lawfully reside there.

Property Lien Referral to DHCS

EWs must use a “Property Lien Referral” (DHCS 7014) to notify DHCS when a client in an LTC facility declares that he/she does not intend to return to his/her principal residence. When the DHCS 7014 is received, DHCS places a statutory lien on the real property; a statutory lien is not a recorded lien.

The Estate Recovery Unit will seek reimbursement upon the MC client’s death through the presentation/filing of a claim demand. The statutory lien will only then become a recorded lien against the real property by voluntary action of the heir(s) as an alternate method of payment or through court decision.

Voluntary Repayments

DHCS cannot accept voluntary repayments from a MC client before his/her death for medical assistance paid or to be paid on his/her behalf.

Post-Death Claim

The sale of a deceased client’s principal residence to pay the estate claim is usually not necessary. If one or more of the dependents, heirs, or survivors, are unable to pay DHCS’ claim in full, and can demonstrate he/she is unable to obtain financing to satisfy the claim, DHCS may offer to accept a post-death lien against the home. A post-death lien is used as means to secure DHCS’ claim and is voluntary. If a request for hardship waiver has been received, DHCS must render its decision regarding hardship, independent of any discussion of a voluntary post-death lien. While the hardship waiver is pending, no interest accrues on DHCS’ claim.

On or after January 1, 2017, if DHCS proposes and accepts a voluntary post-death lien, the voluntary post-death lien will accrue interest at the rate equal to the annual average rate earned on investments in the Surplus Money Investment Fund in the calendar year before the year the MC client passed away or simple interest at 7% per year, whichever is lower.

Monthly Payments

Based on the survivor’s financial ability to pay, DHCS may accept monthly payments from the survivor, in addition to the placement of a lien against the estate property. The lien will accrue interest and become due and payable upon the death of the survivor; the sale, refinance, transfer, or change in title to the estate property; escrow funding; or a default in payments.

What Happens When a Medi-Cal Client Passes Away

The following actions occur when a MC client passes away:

EW
1. Discontinues MC for the deceased client.
DHCS
1. Receives information of MC client’s death. This may be reported by the:
  1. Representative of the deceased MC client,
  2. California Health and Human Services Agency,
  3. Public Health Department - Vital Statistics, and/or
  4. MEDS System.
2. Sends an inquiry notice to the last known address.
Heirs, executor, administrator, etc.
1. Completes and returns inquiry letter with a copy of the death certificate attached.
DHCS
1. Determines if an estate recovery claim will be filed against the estate of the deceased client. If filed, an informing notice is sent to the person handling the estate including:
  1. The basis for the estate claim.
  2. The specific statutes and regulations supporting the claim.
  3. A hardship waiver application and an explanation of the right to seek a waiver of or to contest the DHCS’ claim.
  4. An explanation of the right to request an estate hearing if dissatisfied with the request for a waiver decision.
  5. Timeframes for requesting a waiver or estate hearing.
  6. A summary of the basis for the applicant to seek a waiver or estate hearing due to undue hardship.
    1. NOTE: Hardship requests are determined on an individual basis depending on circumstances.