If you or a loved one have ever needed long-term care, you may already be familiar with Medi-Cal, California’s Medicaid program. But what many families don’t realize is that Medi-Cal benefits come with a potential string attached: the Medicaid Estate Recovery Program (MERP). This program allows the state to seek repayment for certain benefits after the recipient’s death, often from the family home or other assets.

At Katzner Law Group, we regularly help clients understand and prepare for this process to protect their family’s legacy. In this guide, we’ll break down what Medi-Cal estate recovery is, which assets are at risk, and strategies you can use to avoid or reduce exposure.

What Is the Medicaid Estate Recovery Program?

The Medicaid Estate Recovery Program is a federal requirement that mandates states like California to recover the costs of certain Medi-Cal services paid on behalf of individuals aged 55 or older. The primary goal is to recoup expenses from the recipient’s estate to fund future program beneficiaries.

In California, the Department of Health Care Services (DHCS) handles recovery efforts. This typically applies after the recipient’s death and targets the probate estate, assets that would pass through probate under California law.

Key services subject to recovery include:

• Nursing home or long-term care facility expenses
• Home and community-based services
• Hospital and doctor costs related to long-term care
• Prescription drugs

Important: California changed its Medi-Cal recovery laws in 2017. Recovery now only applies to assets subject to probate, which means proper estate planning can limit or even eliminate liability.

For more background on the federal rules behind this, see the Centers for Medicare & Medicaid Services (CMS) page on estate recovery.

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What Assets Are at Risk Under Medicaid Estate Recovery?

The recovery process focuses on the assets owned by the Medi-Cal recipient at the time of death that pass through probate. If those assets aren’t protected through proper legal planning, they could be claimed by the state.

Common probate assets include:

1. Real property titled solely in the decedent’s name
2. Bank accounts without a beneficiary designation
3. Personal property (vehicles, jewelry, etc.) held individually
4. Business interests without succession planning

Assets that typically avoid recovery:

• Joint tenancy or community property with right of survivorship
• Assets held in a properly funded revocable living trust
• Life insurance and retirement accounts with named beneficiaries
• Accounts with payable-on-death (POD) or transfer-on-death (TOD) designations

For information on probate assets in California, visit the California Courts Probate Overview.

When Does Medicaid Try to Recover From an Estate?

The Department of Health Care Services does not immediately act upon the death of a Medi-Cal recipient. Instead, they send a formal Estate Recovery Claim to the estate representative or heirs after learning of the death. This typically comes in the form of a written claim outlining the benefits paid.

There are several key circumstances that affect when and if recovery happens:

• Age: Recovery only applies to recipients who were 55 or older when receiving services.
• Type of services: Focus is on long-term care and related benefits.
• Surviving family: No claim is pursued while a surviving spouse, minor child, or blind/disabled child of any age is still alive.
• Undue hardship: Heirs may apply for a hardship waiver if recovery would cause significant financial hardship.

Timeline of recovery:

1. Death of Medi-Cal recipient
2. Notice sent to DHCS by family or funeral provider
3. Estate receives recovery claim
4. Estate has 90 days to respond or seek hardship exemption
5. If no exemption applies, DHCS may seek recovery through probate

Strategies to Avoid Medi-Cal Estate Recovery in California

Avoiding Medi-Cal estate recovery takes proactive planning. Fortunately, California’s 2017 updates to the law made it easier to shield assets from recovery, but only with the right legal tools in place.

Here are some effective strategies:

1. Establish a Revocable Living Trust

• Trusts allow assets to pass outside of probate.
• Assets titled in the name of the trust are not subject to recovery.
• Must be properly funded, just creating the trust is not enough.

2. Add Beneficiary Designations

• Designate beneficiaries on retirement accounts, life insurance, and bank accounts.
• Use POD (payable-on-death) or TOD (transfer-on-death) accounts to avoid probate.

3. Use Joint Tenancy or Community Property With Right of Survivorship

• Property held jointly passes directly to the co-owner.
• Avoids probate and, thus, estate recovery.

4. Consider Life Estates or Irrevocable Trusts

• In some cases, irrevocable trusts can protect real property.
• Life estates (less common in California) allow you to retain use of property without full ownership.

• In more advanced planning scenarios, families may also explore what is a Medicaid asset protection trust and how this type of irrevocable trust can help preserve certain assets while maintaining eligibility for long-term care benefits.

5. File a Hardship Waiver When Appropriate

• If you qualify, a hardship waiver can reduce or eliminate recovery.
• Must show evidence that enforcement would cause undue financial burden.

Legal Help Is Key to Protecting Your Family’s Home and Assets

Even with California’s more lenient estate recovery rules, it’s easy to make a misstep. Many families are surprised to learn that failing to re-title property into a trust or forgetting to name a beneficiary can lead to unnecessary estate exposure.

Working with an estate planning attorney ensures your strategy complies with both California probate laws and Medi-Cal regulations.

At Katzner Law Group, we help individuals and families protect their legacy through effective trust planning, property titling, and beneficiary strategies that keep your estate safe from recovery claims.

Ready to Safeguard Your Estate from Medi-Cal Recovery?

If you or a loved one are currently using Medi-Cal or expect to need long-term care in the future, now is the time to act. The sooner you create an estate plan with recovery in mind, the more options you’ll have.

Katzner Law Group is here to guide you through the complexities of Medi-Cal estate recovery and create a plan tailored to your needs. Contact us today to speak with an experienced estate planning attorney.

Call us at 855-528-9637 or schedule a consultation to get started today.