BY JAY W. HENDERSON
I have a friend who is having medical problems, at age 62. At one time very wealthy, he now has no income, but owns a very large and valuable piece of ground in Southern California. Unfortunately, it isn’t of a type that can be turned into cash.
Though my friend had signed up for Obamacare through the California Exchange, when he went to the hospital for initial tests, the hospital said that, in his particular case, given
his particular medical problem, they would not take his insurance but would take Medi-Cal (California’s version of Medicaid).
So, my friend applied for the Medi-Cal coverage. The people at the state office were more than helpful and did not ask about assets because the medical side of Medi-Cal is not means tested – they didn’t even want to know about assets. My friend PRESUMED that, because they didn’t ask, there was no danger to his assets. Wrong.
Medicaid is a federal program. It operates under Congressional mandates and gives money to the states, each of which has its own administration system. In the federal enabling act, the states are mandated to “recover” as much of the money as they can from the consumers of the Medicaid services.
California conducts the most vicious recovery system in the country, employing more people than most police departments in their “recovery unit.” State law in California gives Medi-Cal a lien on the assets of anyone who uses services paid for under Medi-Cal. The lien cannot be collected until the person AND HIS SPOUSE dies, but then the state gets all of his assets.
It is even more brutal under the Long Term Care side of Medi-Cal, which is means tested. Under that system, you can’t have any assets, other than a house, and must not have made any transfers for the previous three (3) years when you apply. Once you and your spouse die, the state gets the house.
My friend’s PRESUMPTION that his assets were safe was unfounded. But, and this is crucial, he is not married to his longtime fiancée, who is the beneficiary of his estate plan. If he were to die, even years from now, with the Medi-Cal lien in place, his heirs will lose everything to the state, based on an erroneous PRESUMPTION.
While there are ways to protect assets from even the mighty state of California, you have to know that you should and also know how to accomplish the task.
That’s where we come in. Give us a call.