Jerry Brown on Monday signed into law a bill that limits the state’s seizure of assets from the estates of low-income residents ages 55 to 64.
Beginning Jan. 1, 2017, California will join many other states in the country that only recover the costs of enrollees’ long-term care and related costs after they die.
“They can still come after me if I end up in a nursing home or need home care,” said the 64-year-old Richmond resident. “But other than that, the standard stuff I was so up in arms about will no longer exist. My home will go to my kids.”
The new law, signed as part of the 2016-17 state budget, also would prohibit recovery from the estate of a deceased Medi-Cal member who is survived by a spouse or registered domestic partner. And it prohibits estate recovery if a home is of “modest value” — with a fair market value of 50 percent or less of the average price of homes in the county where it’s is located.
Darling once labeled Brown “the Tin Man of California” with “no heart” after the governor vetoed a previous version of the bill in September 2014 over its costs. Yet Brown’s signing message at the time did not completely close the door on an issue that has riled many Medi-Cal recipients between 55 and 64 years.
Since 2014, millions of people joined Medicaid, called Medi-Cal in California, under a special provision in the nation’s new health care law that expanded the program to low-income adults ages 18 to 64 without children if they earn up to 138 percent of the federal poverty level.
In 2016, that amounts to $16,394 a year for an individual or $22,107 for a couple.
Many of the 735,000 California homeowners ages 55 to 64 who have been laid off and are now getting by on dwindling savings said they did not realize that signing up for the expanded health care program for the poor came with a catch: The state could recover a broad array of costs and assets — including homes — from Medi-Cal recipients 55 and older after they die.
The logic behind the rule is simple: It may be fair for low-income Americans to take advantage of the program, now expanded to 32 states under Obamacare, without having to sacrifice their home or other investments. But when they die, so the thinking goes, the government ought to get reimbursed for its contribution to their medical care.
The provision to dock the estates of older recipients didn’t start with Obamacare; it kicked in when Medicaid was signed into law by President Lyndon Johnson in 1965.
Then, the rule was originally optional and applied only to people 65 or older. But in 1993, the law was changed to require all states to recoup the expenses of long-term care for Medicaid recipients 55 or older. States also were given the option to recover all other Medicaid costs, and California jumped in.
Yet the fear of losing their homes to the state led many low-income Americans to shy away from the health plan of last resort.
Legislation introduced in early 2014 by state Sen. Ed Hernandez , D-West Covina, sought to limit Medi-Cal recovery only to what’s required under federal law: the cost of long-term care in nursing homes.
California Gov. Jerry Brown gestures to a chart showing the unpredictable capital gains revenues as he discusses his revised 2016-17 state budget plan
California Gov. Jerry Brown gestures to a chart showing the unpredictable capital gains revenues as he discusses his revised 2016-17 state budget plan released Friday, May 13, 2016, in Sacramento, Calif.(AP Photo/Rich Pedroncelli) (Rich Pedroncelli)
But in 2014, Brown’s budget advisers balked, warning him that California would lose $15 million annually in general fund revenues as a result.
The federal government is paying 100 percent of the cost for these newly eligible Medicaid recipients until 2017, and 90 percent starting in 2020. But Brown’s advisers feared the state couldn’t afford to cover the rest of the bill in 2020 without getting reimbursed by estates.
Brown’s advisers say that today’s $171 billion spending plan can now accommodate both the costs of Medi-Cal expansion to 3.5 million Californians, and the costs associated with the new law on estate recovery, estimated to cost the general fund $5.7 million in 2016-17 fiscal year, and $28.9 million annually thereafter.
“It is a huge victory that this year’s budget limits estate recovery so that people with modest family homes can pass it on to their children,” Hernandez said in a statement.
Still, Department of Finance spokesman H.D. Palmer cautioned that if budget circumstances change going forward the state would have to “revisit a whole host of issues.”
Contact Tracy Seipel at 408-920-5343. Follow her at Twitter.com/taseipel.
WHAT THE NEW LAW WILL DO
Starting Jan. 1, 2017, Medi-Cal will limit estate recovery to only what the federal government requires. It will:
Prohibit estate recovery for costs of Medi-Cal services other than long-term care services
Prohibit estate recovery for a deceased Medi-Cal member who is survived by a spouse or registered domestic partner.
Allow a hardship exemption from estate recovery for a home of modest value (fair market value is 50 percent or less of the average price of homes in the same county).
Source: California Department of Finance