California's Medi-Cal Estate Recovery Program

California's Medicaid program (called Medi-Cal) provides health care coverage for people with low incomes. Historically, needs-based programs like Medi-Cal and Supplemental Security Income (SSI) have had strict limits on income and assets like bank accounts and real estate.

In 2024, California removed the asset limit for Medi-Cal coverage, making more people eligible for coverage. But if Medi-Cal pays for certain health care services you receive, the state might still try to recover some costs from your estate when you die.

Understanding how the Medi-Cal estate recovery program works can help you make informed decisions while planning your estate and prepare your family for what to expect once you're gone.

When Will California Seek Reimbursement From My Estate?

Federal law requires all states to recover Medicaid costs for certain health care services provided to individuals 55 and older, including:

• the cost of nursing homes and other long-term care facilities
• home and community-based services (HCBS), and
• related drug and hospital expenses.

The law also requires states to recover Medicaid expenses paid on behalf of individuals under 55 who are permanently institutionalized and can't reasonably be expected to return home.

Because of this law, California must try to recover the costs of all long-term care services Medi-Cal pays for, including Medicare cost-sharing payments related to long-term care.

(Learn more about when Medi-Cal will pay for nursing home and assisted living care.)

States also have the option to recover some Medicaid payments made for additional health care services (42 U.S.C. § 1396p(b)), but California doesn't collect these costs from your estate.

Which Medicaid Expenses Must My Estate Repay in California?

California law limits Medicaid estate recovery to only those costs that federal law says the state must recover. (Cal. Welf. & Inst. Code § 14009.5(a)(1).) So, the state will only try to recover what Medi-Cal paid in long-term care-related expenses (including related managed care premiums) from the day you turned 55 or became permanently institutionalized (whichever happened first).

Which Assets Will California Go After for Medicaid Recovery?

California will only try to recover assets from your "probate estate"—assets you own at the time of your death that must go through probate before being used to pay creditors or passed on to your heirs. A probate estate doesn't include:

• bank accounts or retirement accounts with named beneficiaries
• items or property in a living trust
• real estate you owned in "joint tenancy" (property with multiple owners, where ownership automatically passes to the others when one dies), and
• any other property that avoids probate.

Even if your assets go through probate, California won't recover Medi-Cal costs from your estate (ever) if you're survived by:

• your spouse or registered domestic partner
• a child (under 21), or
• a child (of any age) who's blind or disabled (as defined by 42 U.S.C. § 1382c).

No matter how much Medi-Cal paid for your long-term care or managed care premiums, the state can't recover more than it paid out for your care or more than the value of your probate estate. That means your family will never have to repay the state of California from their own funds.

When you became eligible for Medi-Cal, California's Department of Health Care Services (DHCS) should have given you a written notice describing the state's right to recover Medicaid costs following your death. After you've died, the state may send an estate recovery notice to your family, if it intends to try to recover some of its costs.

Can Medi-Cal Put a Lien on My House or Take It Before I Die?

If you enter a long-term care facility (like a nursing home), DHCS might record a lien against your house and could request that the property be sold, unless:

• you tell DHCS that you intend to return home eventually—even if that's not likely
• your surviving spouse or dependent relative still lives in the home
• the co-owner of the home still lives there
• you have a surviving child who's under 21, blind, or disabled, or
• your sibling has an equity interest in the home, lived there for at least one year immediately before you were admitted to the nursing home, and continues to live there.

After your death, the state can negotiate a voluntary lien with the person who inherits your house if the heir is not:

• your spouse
• your registered partner, or
• your child who was either under 21 or disabled when you died.

A voluntary lien can avoid having the state sell the house and collect its costs from the proceeds. Instead, your heir could stay in the home but make monthly payments to the state for the Medicaid reimbursement.

Could My Estate Be Exempt From Medi-Cal Estate Recovery?

Some estates are exempt from Medi-Cal estate recovery. Medi-Cal won't try to recover an estate that consists of a home of "modest value." Your home qualifies for this exemption if its fair market value at the time of your death is no more than 50% of the average home price in your county. (Cal. Welf. & Inst. Code § 14009.5(f)(5).)

In addition, federal law exempts certain income and resources of American Indians and Alaska Natives from estate recovery. (42 U.S.C. § 1396p(b)(3)(B).)

Does My Estate Have to Repay Medi-Cal If It Would Create a Hardship for My Family?

California might waive recovery of your estate if it would cause significant hardship for a beneficiary (someone who is inheriting from your estate). To qualify, the beneficiary must prove that:

• keeping the property allows the person to stop collecting public assistance
• the property is a primary source of income, such as a farm or business
• the person provided care while living in your home, which kept you out of a long-term care facility, or
• the beneficiary is disabled, has lived in your home for at least a year, and can't secure financing to repay the claim.

Other exceptions apply, such as if the equity in the property is needed for basic necessities or the beneficiary had given you the property without payment. (22 Cal. Code Regs. § 50963.)

Although Medi-Cal estate recovery is limited to your probate estate, the state won't issue a hardship waiver if your estate planning (for instance, transferring assets) created the hardship.

How Does My Family Notify the State of California and Repay Medicaid?

Your surviving spouse or the person handling your estate (like the executor of your will) must notify California DHCS of your death within 90 days. Your survivor(s) can complete the "Notice of Death" form and submit a copy of the death certificate:

• online at DHCS.com, or
• by mail to DHCS at Department of Health Care Services, Estate Recovery Program, MS 4720, P.O. Box 997425, Sacramento, CA 95899-7425.

DHCS will then decide whether to pursue recovery and notify the person handling the estate. If Medi-Cal seeks estate recovery, DHCS must provide a copy of the itemized Medi-Cal payments they plan to recover and an application for hardship waiver, Form DHCS 6195. (22 Cal. Code Regs. § 50962(c).)

Where Can I Learn More About Medi-Cal Estate Recovery?

You can get information about California's Medi-Cal estate recovery program by:

• visiting DHCS online
• sending email to DHCS's Estate Recovery department at [email protected], or
• calling 916-650-0490.

You can learn more about repaying Medicaid in general in our article about federal estate recovery rules.