California at Odds with Feds over Medi-Cal After-Death Asset Recovery

Governor Jerry Brown is at odds with the federal government over the issue of Medi-Cal asset recovery, a provision which allows the state to collect money spent on Medicaid from recipients’ estates after they die.

Collection of assets after death for Medicaid expenses, beyond those involved in providing long-term care after age 55, is an optional part of the Medicaid program, but California is one of ten states that has chosen to do so. In February the Centers for Medicare and Medicaid sent a letter recommending that states drop this provision as a way to encourage more people to sign up for expanded Medicaid.

Governor Brown is resisting dropping the asset seizure, and his staff areurging him not to do so, saying the state needs the money to pay forfuture Medi-Cal beneficiaries.

The amount of money at stake is relatively small. The state is estimated to collect about $60 million a year from the program, but half of that goes back to the federal government. The remainder is a proverbial drop in the bucket given that roughly 25 percent of the state’s population is on Medi-Cal at a cost of $26 billion a year.

A bill is making its way through the Senate which would stop the optional forms of asset recovery. SB 1124 would limit asset recovery to long-term care for those 55 and older, which has been a federal mandate since 1993.

The bill, if approved by the Senate and then the Assembly, could be on Governor Brown’s desk by September. The next step is a Health committee vote in the Assembly which is scheduled for Tuesday.