Advocates Want Law To Prevent Estate Recovery For Low-Income Health Benefits

A bill that faces a make-or-break legislative committee vote Thursday would change the law so that California could not recover assets of deceased Medi-Cal recipients for expenses incurred for basic medical services.

Anne-Louise Vernon had been looking forward to signing up for health insurance under Covered California. She hoped to save hundreds of dollars a month. But when she called to enroll, she was told her income wasn’t high enough to purchase a subsidized plan.

“It never even occurred to me I might be on Medi-Cal, and I didn’t know anything about it," says Vernon.

She says she asked whether there were any strings attached.

"And the woman said very cheerfully, "Oh no, no, it’s all free. There's nothing you have to worry about, this is your lucky day.'” she recounts.

Vernon signed up for Medi-Cal on the phone from her home in Campbell. Just months later, she learned online about a state law that allows California to take assets of people who die if they received health care through Medi-Cal after the age of 55.

“So I called Medi-Cal and asked specifically, 'Does this mean what I think it means?'” she says.

It means Medi-Cal managers can take part of her estate later for health care costs she’s accruing now. Federal law requires states to recoup Medicaid money spent on institutional care, such as nursing homes. But California also seizes assets for state spending on basic health services. Vernon says she’s panicked and worried. She doesn’t get a monthly bill – so she’s not sure what she’ll be accountable for.

“I feel as though right now, if I could go to do the doctor and I felt I knew where I stood, there are a number of appointments that I’d be making right now," says Vernon. "But I feel so unsettled about this whole estate recovery thing, that I’m afraid to go to the doctor."

Pauline Bartolone / Capital Public Radio

The California law has been on the books for two decades. Elizabeth Landsberg of the Western Center on Law and Poverty says it turns what was intended to be a safety net program into a long-term loan program. It undermines the security that families might pass on to the next generation.

“So in most cases it's modest family homes that we’re talking about, and so the state will most often come back and put a lien on that home, and unfortunately it does force the kids to sell the homes sometimes, ” says Landsberg.

Landsberg says the law is complicating Medi-Cal enrollment. Some people have refused to sign up, or have terminated enrollment for fear of losing their estate. She says it’s unfair because people buying insurance through Covered California aren’t subject to the same rules.

“For the first time people have to have health coverage. So it’s created an inequity where the lowest income people could lose their assets, and other higher income people who are also getting publically-subsidized health coverage have no worries, ” says Landsberg.

Pauline Bartolone / Capital Public Radio 

Over the past 20 years, the state of California has recovered almost a billion dollars that paid for long term care and basic health services through Medi-Cal.

Norman Williams of the California Department of Health Care Services says that’s just a very small fraction of the overall Medi-Cal budget during that time.

“The funds are collected and returned to the state general fund and along with federal matching funds, that’s used to provide care for members beyond what we have now," says Williams.

Williams says the average claim is about $95,000.

“But the average amount collected is about $15,000," he says. "There are many exceptions available. Hardship exemptions for instance. If there are children who are living and under 21, there is no claim against the Medi-Cal members estate."

A bill in the California legislature would eliminate state recovery for basic Medi-Cal services for older Californians. It would also require the state to provide health claim information for free, so enrollees can keep track of their expenses.

That’s something Anne-Louise Vernon is advocating for.

“I don’t understand why someone my age, in my situation has been singled out to be a cash cow for the state of California, when this is not required by the federal government,” says Vernon.

If the measure is approved by lawmakers, it might have a tough time getting the governor’s signature. The California Department of Finance says it would remove $30 million in revenue that helps pay for the health care of other low-income Californians.

California Department of Health

Medi-Cal Estate Recovery Program Brochure

California HealthCare Foundation Brief On Medi-Cal Estate Recovery Under ACA

Click here to see a chart of estates recovered