The state’s Medi-Cal program has long looked to the estates and heirs of deceased Californians to recoup public money spent on their healthcare in the last years of life.
But the practice — including suing survivors and filing liens against the homes of poor families — is coming under attack in Sacramento.
On Thursday, the state Senate approved, 33 to 0, a bill by state Sen. Ed Hernandez (D-West Covina) to order major changes in the Medi-Cal recovery program. It now goes to the Assembly.
If signed into law, Senate Bill 33 would limit the state’s ability to go after homes “of modest value,” allowing survivors hardship exemptions for homes with fair market value of 50% or less of the county average. It would also prohibit seeking money from the estates of surviving spouses.
The bill targets California-specific provisions of the recovery program, which are more aggressive than required by federal Medicaid regulations.
Hernandez took interest after learning that many poor families were reluctant to sign up for Medi-Cal because they didn’t want the state collecting after they died. Taking from estates and heirs “needlessly prolongs poverty,” he said Thursday.
“Californians shouldn’t be forced to put their house on the line in order to receive basic healthcare services,” he said.
Since 1993, California has recovered more than $1 billion from Medi-Cal recipients’ estates — and that number could swell as thousands more low-income people sign up for Medi-Cal as part of the Affordable Care Act. Almost a third of all Californians get some kind of assistance from Medi-Cal.
The $1 billion seized came from the estates of Medi-Cal recipients who died leaving behind assets, often their homes. If heirs do not voluntarily pay off the Medi-Cal debt, or win hardship exemptions, California officials file lawsuits to collect the debt in court.
The state’s recovery efforts take many survivors by surprise. Linda Conder, a 67-year-old Whittier woman, said she had no idea she could have taken steps to protect her mother’s assets from collection.
The state sued her in March, seeking $120,000 her mother held in a bank account when she died in 2010. Medi-Cal had paid that amount to cover her mother’s care between 1999 and 2003.
“If you’re wealthy enough, you can set it up in a certain way” to avoid collection, she said. “We didn’t know that. We don’t have attorneys working for us. That’s not the way everyday America works.”
Proponents of national collection efforts note that Medicaid (called Medi-Cal in California) was intended as a last resort for people with no means to pay for healthcare — not a way to preserve assets they hope to pass down to heirs.
“Medicaid has been and should be the program of last resort for people who really have nowhere else to go,” said Matt Salo, executive director of the National Assn. of Medicaid Directors. “For people who do have options, for people who do have means, you really shouldn’t be relying on Medicaid for long-term care coverage.”
This year, the state also sued the five children of Trinidad and Maria Acosta to collect the $160,000 that Medi-Cal paid for the couple’s nursing home stays before they died. The Acostas left behind one asset, their home in the Cypress Park neighborhood of Los Angeles.
The immigrants from Guadalajara, Mexico, had worked hard to reach that goal — Trinidad as a welder, Maria a seamstress. One day, they thought, the two-bedroom home would be passed down to their five children: Maria, Juan, Rigoberto, Francisco and Gabriela.
But after the Acostas died, the state Department of Health Care Services sued their children, seeking more than $160,000, money that could come from only one place: the 1,056-square-foot home in which they were raised.
Federal law requires states to recover from the estates of deceased people who received Medicaid assistance for long-term medical care, including nursing homes. But California takes it one step further, collecting for nearly all medical services for people 55 and older covered by Medi-Cal.
There are exceptions. The state doesn’t collect if the person who died has a child under age 21, or a child who’s disabled. If there’s a surviving spouse, the state holds off until that spouse dies.
When Trinidad Acosta died in 2000, the state didn’t collect the $72,000 that Medi-Cal had spent to cover his stay in a nursing home because his wife was still alive. But after Maria Acosta died in 2011, the state put in a $162,000 claim against her estate — for the $90,000 Medi-Cal spent on her health coverage, plus the money it had spent on her husband.
The couple’s daughter Maria Villegas said the only way they can pay that bill is to sell their parents’ home on Arvia Street. It’s a shame, she said, because her parents had worked hard to pay off the home.
“I saw my parents struggle to buy that home and pride they had in keeping that house,” Villegas said. “It was a legacy they left to us.”
Selling the home to pay the Medi-Cal collectors would not be easy; two of her brothers live in the home and are unemployed, she said.
“God willing, they have a lot of years ahead of them. Where will they go? They’ll be homeless,” she said.
Margaret Hoffeditz, chief of the recovery branch of the state Department of Health Care Services, said the state will not evict heirs from a home. Rather, the state would place a lien on the property and collect only when the home is sold — even if it’s decades later.
“We’ve never forced the sale of a home.... We’re not in the business of tossing people out onto the street,” Hoffeditz said.
The department also allows heirs to make hardship claims and will, in some cases, reduce or forgive Medi-Cal debts, she said. In the fiscal year that ended June 30, the department granted more than 100 hardship claims, agreeing to reduce or eliminate the debt.
The state’s compassionate collection efforts are of little comfort to Anne-Louise Vernon, a 60-year-old unemployed woman who said she was forced to choose Medi-Cal when she signed up for insurance under the Affordable Care Act because she did not make enough money to be eligible for other policies.
Now, the premiums that Medi-Cal pays for her policy with Kaiser Permanente — about $600 a month — are accumulating as a bill that will be collectible from her estate, which would include a home in Campbell, near San Jose.
“Remember, now it’s against the law not to get health insurance,” Vernon said. “To be forced into a debt against your will, it’s ugly.”
Gov. Jerry Brown vetoed a similar bill from Hernandez last year, citing financial considerations. Limiting Medi-Cal estate collection could cost the state about $25 million a year, by some estimates.
Hernandez said he is optimistic about the bill’s chances this year. “Gov. Brown has the power to stop estate recovery,” he said Thursday, “either through the budget or by signing this bill. I trust that he will make the right choice this year.”