Recovery Avoidance

The state can demand to be reimbursed for all benefits paid after the Medi-Cal beneficiary’s death. This could include forcing the sale of the family home to pay off the claim. However, there are several significant exceptions and methods that can avoid this. Most importantly, the State cannot recover during the life of a surviving spouse. In some cases though, they may attempt to recover after the surviving spouse passes, but before the estate is distributed to their children or beneficiaries. There are, however, exceptions to this that offer planning opportunities. Significant among these exceptions: the State can recover only against property that is in the estate of the Medi-Cal recipient at that time of their death. There are planning tools that can assure that there is little or no property that will be considered to be in the Medi-Cal recipient’s estate, therefore, no recovery. Again, there are some technical pitfalls and significant adverse tax impacts if this is not done correctly, so please consult a Certified Elder Law Attorney experienced in Medi-Cal planning before attempting recovery-avoidance planning or asset transfers. Much may be at stake in doing this right. We frequently see families where they have attempted their own asset transfers, either for perceived eligibility or recovery purposes, which has generated ineligibility and catastrophic tax impacts far worse than any recovery. We would be pleased to help you develop your recovery-avoidance plan, and draft any required documents to assure it is done correctly.

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