After several years of advocacy by Consumers Union and other consumer organizations, California law has now been fixed to ensure that early retirees in California (people age 55-64) will not have to put their family homes at risk if they receive health coverage through Medi-Cal, California’s Medicaid program serving lower-income consumers. The law goes into effect January 1, 2017. Here’s why that matters.
Nearly all Americans are now required to have health coverage or face a tax penalty under the Affordable Care Act. When consumers who sign up for coverage through the state turn out to be eligible for Medi-Cal, they are automatically ineligible for subsidized coverage through our Exchange, Covered California. The problem was that, for consumers age 55-64, California law said that getting Medi-Cal also meant the potential loss of the family home.
The federal government sets the rules for how much states can collect from consumers who receive Medicaid benefits. While it requires states to recover the cost of nursing home care paid for by Medicaid, it also gives states the option to also collect the cost of general medical care – hospitalizations and doctors visits – by placing liens on the homes and savings of those 55 and older. Until recently, California was one of only 10 states that had opted to take advantage of this additional “estate recovery program” to collect more than is required by the federal rules – meaning that low-income people in California who enrolled in Medi-Cal did so at the risk of having their homes and savings seized after their death.
Seniors 55 and older were being forced to choose between getting needed basic health coverage through the Medi-Cal program and leaving the family home to their children, and some chose to forego coverage and care rather than taking that risk. Consumers Union and other advocates argued that this policy undermined the Affordable Care Act by discouraging those 55 and older from applying for coverage, and leaving them at the mercy of the private market without financial assistance – often an unaffordable option – causing increased risks to their health and family finances.
Fortunately, California’s new budget bill will eliminate this form of estate recovery, a win for lower-income Californians who start receiving benefits at or beyond age 55. With this change, the state can no longer recover the cost of general care from those enrolled in Medi-Cal from age 55-64 who pass away on or after January 1, 2017. This bill will make it possible for many seniors to get access to needed coverage and care, and we applaud California lawmakers and Governor Brown for taking this step to increase fairness in the healthcare marketplace!