Amended in Senate April 6, 2015

Amended in Senate March 17, 2015

Amended in Senate March 11, 2015

Senate BillNo. 33


Introduced by Senator Hernandez

December 1, 2014


An act to amend Section 14009.5 of the Welfare and Institutions Code, relating to Medi-Cal.

LEGISLATIVE COUNSEL’S DIGEST

SB 33, as amended, Hernandez. Medi-Cal: estate recovery.

Existing law provides for the Medi-Cal program, which is administered by the State Department of Health Care Services and under which qualified low-income persons receive health care benefits. The Medi-Cal program is, in part, governed and funded by federal Medicaid provisions.

Existing federal law requires the state to seek adjustment or recovery from an individual’s estate for specified medical assistance, including nursing facility services, home and community-based services, and related hospital and prescription drug services, if the individual was 55 years of age or older when he or she received the medical assistance. Existing federal law allows the state, at its own option, to seek recovery for any items or services covered under the state’s Medicaid plan.

Existing state law, with certain exceptions, requires the department to claim against the estate of a decedent, or against any recipient of the property of that decedent by distribution or survival, an amount equal to the payments for Medi-Cal services received or the value of the property received by any recipient from the decedent by distribution or survival, whichever is less. Existing law provides for certain exemptions that restrict the department from filing a claim against a decedent’s property, including when there is a surviving spouse during his or her lifetime. Existing law requires the department, however, to make a claim upon the death of the surviving spouse, as prescribed. Existing law requires the department to waive its claim, in whole or in part, if it determines that enforcement of the claim would result in a substantial hardship, as specified. Existing law, which has been held invalid by existing case law, provides that the exemptions shall only apply to the proportionate share of the decedent’s estate or property that passes to those recipients, by survival or distribution, who qualify for the exemptions.

This bill would instead require the department to make these claims only in specified circumstances for those health care services that the state is required to recover under federal law, and would define health care services for these purposes. The bill would limit any claims against the estate of a decedent to only the real and personal property or other assets the state is required to seek recovery from under federal law. The bill would delete the proportionate share provision and would delete the requirement that the department make a claim upon the death of the surviving spouse. The bill would require the department to waive its claim when the estate subject to recovery is a homestead of modest value, as defined.begin insert The bill would limit the amount of interest that is entitled to accrue on a voluntary postend insertbegin insertdeath lien, as specified.end insert The bill would also require the department to provide a current or former beneficiary, or his or her authorized representative, upon request and free of charge, with the total amount of Medi-Cal expenses that have been paid on his or her behalf that would be recoverable under these provisions, as specified. The bill would apply the changes made by these provisions only to individuals who die on or after January 1, 2016.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insert(a)end insertbegin insertend insertbegin insertThe Legislature finds and declares all of the
2following:end insert

begin insert

3(1) Existing federal law (42 U.S.C. Sec. 1396p) requires state
4Medicaid programs to seek reimbursement from the estates of
5deceased Medicaid beneficiaries, or from any recipient of the
P3    1decedent’s property by distribution or survival, for Medicaid paid
2services received on or after 55 years of age, unless specific
3exemptions or other limitations apply.

end insert
begin insert

4(2) Federal law requires states to collect for long-term services
5and supports for individuals 55 years of age or older, and gives
6states the option to collect for other health care services.

end insert
begin insert

7(3) Federal law permits states to collect from the surviving
8spouse of a Medi-Cal beneficiary, but does not require collection
9upon the passing of a spouse of a deceased Medi-Cal beneficiary.

end insert
begin insert

10(4) Federal law defines “estate” for purposes of estate recovery
11to include all real and personal property and other assets included
12within the individual’s estate, as defined for purposes of state
13probate law, and permits states to have a broader definition of
14estate.

end insert
begin insert

15(5) The State Medicaid Manual allows states to establish an
16undue hardship exemption from estate recovery for a homestead
17of “modest value,” defined as a home valued at 50 percent or less
18of the average price of homes in the county where the homestead
19is located as of the date of the beneficiary’s death.

end insert
begin insert

20(6) Estate recovery is unfair to low-income individuals who
21need Medi-Cal for basic health care coverage, is a deterrent to
22signing individuals up for Medi-Cal, and is counter to both state
23and federal efforts to enroll individuals into health care coverage.

end insert
begin insert

24(7) By recovering for health care services beyond what is
25required by federal law, California forces low-income individuals
2655 years of age or older to choose between signing up for basic
27health care services and passing on their home and other limited
28assets they possess to their children.

end insert
begin insert

29(8) California’s estate recovery program undermines the idea
30of Medi-Cal as a health care entitlement program by essentially
31turning Medi-Cal coverage for basic medical services into a loan
32program, with collection taking place at death.

end insert
begin insert

33(9) Estate recovery unfairly places part of the burden of
34financing the cost of health care in Medi-Cal on the estates of
35deceased Medi-Cal beneficiaries with limited assets.

end insert
begin insert

36(10) Estate recovery is inequitable as other social and health
37care programs, such as tax-subsidized coverage through the
38California Health Benefit Exchange, commonly referred to as
39Covered California, and the broadly financed federal Medicare
40program, do not have estate recovery.

end insert
begin insert

P4    1(11) California does not adequately inform individuals on how
2to obtain information on the amounts that will be collected from
3their estate, and charges individuals $25 to find out how much
4Medi-Cal has spent on their behalf.

end insert
begin insert

5(b) It is the intent of the Legislature, with the enactment of this
6act, to do all of the following:

end insert
begin insert

7(1) Limit Medi-Cal estate recovery to only those services
8required to be collected for under federal law.

end insert
begin insert

9(2) Limit the definition of “estate” to include only the real and
10personal property and other assets required to be included within
11the definition of “estate” under federal law.

end insert
begin insert

12(3) Require the State Department of Health Care Services to
13implement the option in the State Medicaid Manual to waive its
14claim, as a substantial hardship, when the estate, subject to
15recovery, is a homestead of modest value.

end insert
begin insert

16(4) Prohibit recovery from the surviving spouse of a deceased
17Medi-Cal beneficiary.

end insert
begin insert

18(5) Ensure that Medi-Cal beneficiaries can easily and timely
19receive information about how much their estate will owe Medi-Cal
20when they die.

end insert
21

begin deleteSECTION 1.end delete
22begin insertSEC. 2.end insert  

Section 14009.5 of the Welfare and Institutions Code
23 is amended to read:

24

14009.5.  

(a) Notwithstanding any other provision of this
25chapter, the department shall claim against the estate of the
26decedent, or against any recipient of the property of that decedent
27by distribution an amount equal to the payments for the health care
28services received or the value of the property received by any
29recipient from the decedent by distribution, whichever is less, only
30in either of the following circumstances:

31(1) Notwithstanding paragraph (2), against the real property of
32a decedent who was an inpatient in a nursing facility in accordance
33with Section 1396p(b)(1)(A) of Title 42 of the United States Code.

34(2) (A) The decedent was 55 years of age or older when the
35individual received health care services.

36(B) The department shall not claim under this paragraph when
37there is any of the following:

38(i) A surviving spouse.

39(ii) A surviving child who is under 21 years of age.

P5    1(iii) A surviving child who is blind or permanently and totally
2disabled, within the meaning of Section 1614 of the federal Social
3Security Act (42 U.S.C. Sec. 1382c).

4(b) (1) The department shall waive its claim, in whole or in
5part, if it determines that enforcement of the claim would result in
6substantial hardship to other dependents, heirs, or survivors of the
7individual against whose estate the claim exists.

8(2) In determining the existence of substantial hardship, in
9addition to other factors considered by the department consistent
10with federal law and guidance, the department shall waive its claim
11when the estate subject to recovery is a homestead of modest value.

12(3) The department shall notify individuals of the waiver
13provision and the opportunity for a hearing to establish that a
14waiver should be granted.

begin insert

15(c) If the department proposes and accepts a voluntary postdeath
16lien, the voluntary postdeath lien shall accrue interest at the rate
17equal to the monthly average received on investments in the Surplus
18Money Investment Fund or simple interest at 7 percent per annum,
19whichever is lower.

end insert
begin delete

20(c)

end delete

21begin insert(end insertbegin insertd)end insert (1) The department shall provide a current or former
22beneficiary, or his or her authorized representative designated
23under Section 14014.5, upon request and free of charge, with the
24total amount of Medi-Cal expenses that have been paid on behalf
25of that beneficiary that would be recoverable under this section.

26(2) The department shall permit a beneficiary to request the
27information described in paragraph (1) through the Internet, by
28telephone, by mail, in person, or through other commonly available
29electronic means.

30(3) The department shall conspicuously post on its Internet Web
31site, a description of the methods by which a request under this
32subdivision may be made, including, but not limited to, the
33department’s telephone number and any addresses that may be
34used for this purpose. The department shall also include this
35information in its pamphlet for the Medi-Cal Estate Recovery
36Program and any other notices the department distributes to
37beneficiaries regarding estate recovery.

38(4) Upon receiving a request for the information described in
39paragraph (1), the department shall provide the information
40requested within 30 days after receipt of the request.

begin delete

P6    1(d)

end delete

2begin insert(e)end insert The following definitions shall govern the construction of
3this section:

4(1) “Decedent” means a beneficiary who has received health
5care under this chapter or Chapter 8 (commencing with Section
614200) and who has died leaving property to others either through
7distribution or survival.

8(2) “Dependents” includes, but is not limited to, immediate
9family or blood relatives of the decedent.

10(3) begin delete”Estate” end deletebegin insert“Estate” end insertmeans all real and personal property and
11other assets that are required to be subject to a claim for recovery
12pursuant to Section 1396p(b)(4)(A) of Title 42 of the United States
13Code. “Estate” shall not include any other real and personal
14property or other assets in which the individual had any legal title
15or interest at the time of death, to the extent of that interest,
16including any assets conveyed to a survivor, heir, or assign of the
17decedent through joint tenancy, tenancy in common, survivorship,
18life estate, living trust, or other arrangement, consistent with
19Section 1396p(b)(4)(B) of Title 42 of the United States Code.

20(4) “Health care services” means only those services required
21to be recovered under Section 1396p(b)(1)(B)(i) of Title 42 of the
22United States Code.

23(5) “Homestead of modest value” means a home whose fair
24market value is 50 percent or less of the average price of homes
25in the county where the homestead is located, as of the date of the
26decedent’s death.

begin delete

27(e)

end delete

28begin insert(f)end insert The amendments made to this section by the act that added
29this subdivision shall apply only to individuals who die on or after
30January 1, 2016.



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