Is Medi-Cal going to take Mom's home to pay her hospital bills?

A fellow caregiver asked...

My mom who is on Medi-Cal received a letter from Deprtment of Health Care Services regarding this department claiming on her estate for the cost of Medi-Cal after she passes away. She has a house and a living trust to pass on the house to her children. She has had two hospitalization aside from regular medical visits which were all covered by Medi-Cal and Medicare. Can you please let me know if the State can take the house away to pay for the premium and hospital and doctor visits? What can be done to reduce or avoid losing the house?

Expert Answer

The good news is that Medi-Cal (California's version of Medicaid) will not touch your mother's house as long as she is alive. Medicaid rules exempted the house from consideration by Medi-Cal when it determined your mother's eligibility for the program, and it also protects the house from Medi-Cal claims as long as your mother is alive. However, this protection for the house does not continue after she's gone.

Medi-Cal has notified your mother -- and, in effect, her children -- that it intends to make a claim on her estate after she dies to be repaid the money it has spent on her medical care. This rule applies to expenses Medi-Cal pays for anyone over age 55. So, when your mother dies, Medi-Cal will press its claim against your mother's estate, which will include the value of the house. The reason for this is that Medi-Cal (and other Medicaid programs) is intended to help pay medical bills for people who have low income and few assets. A house, of course, is a large asset. But Medi-Cal/Medicaid doesn't want to force people to choose between keeping their home and paying their medical bills. So, it allows people to keep their home while Medicaid pays for medical care. On the other hand, the purpose of Medicaid -- to help people with little money to pay medical bills -- is not served by allowing the children of a Medicaid recipient to take the full value of the house after the Medicaid recipient dies. That would be a case of the children having their cake (having Medicaid, not them, pay their parent's medical bills) and eating it, too (getting to keep a valuable asset, like a house).

In your mother's case, the amount Medi-Cal can collect from your mother's estate -- essentially, out of the value of the house -- is only what they will have actually spent on her care by the time she passes away. Medicare will cover most of her medical bills after she reached age 65, so the total that Medi-Cal pays will only be the amounts that Medicare does not pay. Those amounts must be repaid by the estate -- meaning your mother's children -- one way or another. If the children or any one of them wants to keep the house after your mother is gone, then the amount will have to be repaid to Medi-Cal from some other source. If the money is not repaid in cash, the house will have to be sold, and Medi-Cal repaid out of the proceeds of the sale.