MediCal chargeback (part 1)

A Trust can save you hundreds of thousands of dollars by avoiding MediCal benefit "chargeback" or recovery against your home for benefits paid to skilled nursing homes.

If you have an elderly person in your life and they live in a nursing home, it's not uncommon to pay $5,000/month. If they don't have much cash, even if they have a house, MediCal (public benefit program) will pay that rent for them as long as they live.

Before 2017, law offices used to prepare documents they called "House Trusts" to help clients legally avoid MediCal Chargeback claims. The law changed in 2017 so if you only have a will, you are subject to MediCal Chargeback claims. If you have your revocable trust holding title to your home, you can avoid the MediCal Chargeback claims after you pass away. (See California Government Code Section 1000504.)

For someone in a nursing home due to Alzheimer's disease, for example, it is important that their property is in a trust. This is because the law now says that if a person is getting MediCal for their nursing home costs when they die if it's in a trust there is no Chargeback. This can be huge and is especially important for surviving spouses. The costs could easily end up being $900,000 over a person's lifetime for the costs associated with a skilled nursing home. The use of a revocable trust in this situation could be a huge benefit to your beneficiaries.

The relatively new statute described in GC code Section 100504, limits MediCal Estate Recovery against MediCal recipients that have passed away. The estate recovery is basically asset seizure of the home and savings of low-income individuals who have received health care coverage through MediCal and are 55 or older or permanently institutionalized. The Federal Government requires estate recovery for long term services such as nursing home costs, but California goes beyond the federal requirement. The budget limits estate recovery for individuals who pass away after January 1, 2017.

Reprinted with permission Rex L. Crandell, attorney at law.

Diana Wade is a Legal Document Assistant. She can be reached at (661) 821-0494 or [email protected]. Diana is not an attorney; she can only provide self-help services at your specific direction. Kern County LDA #185, ex 4/11/25.