For Some, Medi-Cal Might Mean Ultimately Losing Their Homes

Anne-Louise Vernon in front of her home in Campbell. (Photo: Pauline Bartolone)

Anne-Louise Vernon in front of her home in Campbell. She recently enrolled in Medi-Cal then found out the state could use proceeds from her home to recover costs of her health care. (Photo: Pauline Bartolone)

By Pauline Bartolone, Kaiser Health News

Anne-Louise Vernon had been looking forward to signing up for health insurance under Covered California. She was hoping 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,” she said, in reference to the state’s version of Medicaid, “and I didn’t know anything about it.”

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. But 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. A 1993 federal law requires states to recoup Medicaid money spent on institutional care, such as nursing homes, and it gives states the option to recover all health costs from people 55 and over. California took that option.

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.”

The California law has now 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 publicly-subsidized health coverage have no worries, ” says Landsberg.

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 member’s estate.”

A bill in the California legislature, SB 1124, 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.

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  • AnonCaliforniaNative

    Luckily our family home was foreclosed on years ago. IMHO this is a “good problem” to have, especially for a home owner in Campbell ($$$). My understanding is the state seeks reimbursement after death. Medi-cal should be called a “loan program.”

    • http://www.humboldtlib.blogspot.com/ Fred Mangels

      I’m on one of the Covered CA plans now, but the wife is still on MediCal so our house is up for grabs. I really don’t have a problem with it since we don’t have kids.

  • jskdn

    The 1993 law reflected an entirely different state of government-paid medical care than that which exists now under the Affordable Care Act. This makes recovery for medical care similar to what is covered by insurance but obtained under Medi-Cal inappropriate. That’s not true for long-term nursing home care, which isn’t a covered benefit under medical insurance. Some other states that also had recovery programs quickly realized that and have already acted to fix this.

    People in California who want any help paying for the medical care and who are under 133% of the Federal Poverty Level have no other option to obtain help but to enroll in Medi-Cal. The reason the Affordable Care Act denies them the ability to access the subsidized insurance through exchanges available to those above that income level was to save money for the government. Medicaid/Medi-Cal costs the government less than subsidized private exchange insurance for those just above that income threshold. If they were given the option to choose between Med-Cal and the same exchange coverage options those with higher income have available, then this wouldn’t be an issue. But it isn’t and subjecting them to estate indebtedness is wrong. Punishing people because their income is lower than that which allows them to buy on the exchange is truly perverse. So why is California doing it?

    For the most part, I can’t see how it could even be California’s money that would be had through state-implemented recovery, as the Federal government is picking up all the costs now, and 90% later, of most of the newly qualified population. The state can’t “recover” for something it didn’t pay for. I like to know if that’s not true. Would the federal government allow California to keep the money it takes from people’s estates for medical care that was paid for by the federal government?

    Finally, how can it be appropriate to be doing this without clearly informing those in Medi-Cal of how and what expenses are to be charged to their estate? No private entity could get away with failing to disclose and make an accounting of claims to the person subject to them. Why should the state be able to do so without similar transparency?

    • http://www.humboldtlib.blogspot.com/ Fred Mangels

      “…how can it be appropriate to be doing this without clearly informing
      those in Medi-Cal of how and what expenses are to be charged to their
      estate?”

      I would think you sign something when applying for MediCal that tells you this, but it’s probably in the fine print. I don’t specifically recall them telling us when we signed up, but maybe I wasn’t listening close enough.

      I do know when I was on CMSP (county run version of MediCal) and the wife was on MediCal, we received a notice in the mail once or twice a year informing us that our homes could be subject to forfeiture upon our deaths.

      • jskdn

        How are Medi-Cal recipient’s medical care loans against their estates being calculated? I believe that most Medi-Cal recipients are in capitated payment HMO’s. If that’s the extent of government payments on their behalf, is that what the state will seek to “recover”? Shouldn’t people be informed of the amount of such payments if their estates are to be forced to pay that back? Again, most spending on those with recoverable estate assets is likely being done by the federal government, so who gets the recovery proceeds?

        • Fonzo Hiller

          The federal government. California is becoming the collection agency for the federal government with the help of Jerry Brown and against the interest of Californians.

          And yes, the program is administered by for-profit HMOs, no matter if the people whose estate is getting robbed need medical care or not.

          Help, I think I’m turning libertarian (or worse) in my old age…

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  • Fonzo Hiller

    I am 59 years old with a house that’s paid off and enough cash set aside to last me til 62 if living frugally. My retirement strategy had been to collect social security at 62 and supplement it with a reverse mortgage. That should have been enough to sustain me without worries of loosing my home during my lifetime. If I were to become infirm and needed assisted living, the home would not be of use to me and I would have found it fair to pay for nursing home care out of my home’s equity.

    Now that the government places a lien against my home to recover MediCal expenses, I doubt I will qualify for a reverse mortgage.

    The options then are to take out a loan on the house and make sure I die early enough before that money is spent. If that’s the perspective you want to impose on me, Governer Brown, then I really didn’t need health insurance, did I?

    Ironically, I’m healthy as a fiddle so I’m loosing my home and retirement for no reason at all.

    • jskdn

      How does the Medi-Cal recovery affect your credit opportunities and use of your assets? Too bad those in the news media don’t seem to care enough to get answers important questions that affect people’s lives, likely because they aren’t the lives of “reporters.”

    • Guest

      You should talk to an estate planner or an attorney, but I do not believe that Medi-Cal can put a lien on your home as long as you’re alive and living in it, or prevent you from selling or refinancing it. They make a claim on your estate after you die and if you no longer have the home, then they just have nothing to claim.