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

6 answers | Last updated: Mar 16, 2017
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 Answers

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.

Community Answers

A fellow caregiver answered...

In the case of my grandmother, the trust prevented the state (Washington)from touching any of the proceeds from the sale of her home after she died. California's laws may be different, but something to look into.

Frederick p. answered...

Joseph (above) did not answer the second question asked.

"What can be done to reduce or avoid losing the house?"

Wouldn't a "quitclaim deed" suffice?

From Wikipedia, the free encyclopedia

A quitclaim deed (sometimes erroneously referred to as a "quick-claim" deed) is a legal instrument by which the owner of a piece of real property, called the grantor, transfers his interest to a recipient, called the grantee.[1] The owner/grantor terminates ("quits") his right and claim to the property, thereby allowing claim to transfer to the recipient/grantee.

Unlike most other property deeds, a quitclaim deed contains no title convenant and thus, offers the grantee no warranty as to the status of the property title; the grantee is only entitled to whatever interest the grantor actually possesses at the time the transfer occurs.[2] This means that the grantor does not guarantee that he actually owns the property at the time of the transfer, or if he does own it, that the title is free and clear. It is therefore possible for a grantee to receive no actual interest, and "“ because a quitclaim deed offers no warranty "“ have no legal recourse to recover their losses. Further, if the grantor should acquire the property at a later date, the grantee is not entitled to take possession, because the grantee can only receive the interest the grantor held at the time the transfer occurred. In contrast, other deeds often used for real estate sales (called grant deeds or warranty deeds, depending on the jurisdiction) contain warranties from the grantor to the grantee that the title is clear and/or that the grantor has not placed any encumbrance against the title.

Because of this lack of warranty, quitclaim deeds are most often used to transfer property between family members, as gifts, placing personal property into a business entity (and vice-versa) or in other special or unique circumstances. Quitclaim deeds are rarely used to transfer property from seller to buyer in a traditional property sale; in most cases, the grantor and grantee have an existing relationship or is the same person.[3]

Another common use for a quitclaim deed is in divorce, whereby one spouse terminates any interest in the jointly owned marital home, thereby granting the receiving spouse full rights to the property. For example, when a wife acquires the marital home in a divorce settlement, the husband could execute a quitclaim deed eliminating his interest in the property and transferring full claim to the wife quickly and inexpensively.[4]

In some jurisdictions, quitclaim deeds may also be used in tax deed sales, where a property is sold in a public auction to recover the original homeowner's outstanding tax debt. The auctioning body is usually the local government, which claims no interest to the property whatsoever, but is selling only to recover the unpaid taxes without extending any warranty for the property title.

Skepticalhusband answered...

My understanding is that the way to reduce the amount the state takes from the sale of the house is to keep all medical bills currently paid up. In our case we either 1) did not go to the dr or hospital every time we needed to or 2)applied for and got a low income discount and then paid the bill or made payments on the bills themselves.
If you are able to keep Medi-Cal from paying her medical bills then they will have little to get back upon the sale of the house.

A fellow caregiver answered...

There aren't really enough details in the question to provide a full answer about keeping the house. In general, when a person places assets into a trust to create Medicaid eligibility the trust itself must be an irrevocable trust. That is, the trust cannot be changed after it is created. (A trust that can be changed is called a revocable trust and won't work for Medicaid eligibility.) Giving that right to the government is what makes Medicaid eligibility possible for a person with too many assets to be eligible for a program intended for the poor. Assets remaining after the medical costs are paid then pass to the decedant's beneficiaries. In order to begin figuring out what to do, you will need to obtain a copy of the trust document and consult an attorney experienced with MediCal eligibility requirements and estate law.

A fellow caregiver answered...

Is this only applied for someone, age over 55 or any age? My husband is 37 and he's had a heart failure. He's receiving a medi-cal since he's disabled to work, no income... We have a home, community property with a survivorship. I thought this would help without quitclaim deed if anything happened. Am I wrong?

I feel unfair for some reason that they will try to take a home for medical bills when he dies. Dr even doesn't know how long he can live. I bought a condo with my inheritance from my mom. She sacrificed all her life and try to leave more money for me and I used up for down payment. At least, I wanted to protect my own money from this disaster. My husband has nothing and he didn't want to buy a house. I thought our future looks dark so I ended up buying a home for us. However, now he's sick and not able to work. He's most of time looking ok but he gets tired easily. He doesn't seem to care about me. Only what he says is everything will be ok. I don't think so. I am so dreadful... Should I do a quitclaim deed? Is it at least protected?