Do I Have to Pay Back Medi-Cal? Liens, Exemptions, and Waivers

You never have to pay back Medi-Cal during your lifetime for benefits you received, and after your death the state can only seek repayment in specific circumstances. California’s Department of Health Care Services (DHCS) can file a claim against a deceased beneficiary’s estate for certain long-term care costs, but only if the beneficiary was 55 or older when they received those services or was permanently institutionalized, and only if no protected family member survives them.¹ For deaths on or after January 1, 2017, the state can only reach assets that pass through probate, which protects a large share of family property from any claim.²

Which Services Can Be Recovered

Not every Medi-Cal expense is recoverable. The state cannot bill your estate for routine doctor’s visits, regular prescriptions, or ordinary outpatient care if you were 55 or older. Recovery is limited to long-term care categories:

Nursing facility services, including skilled nursing and intermediate care facilities for individuals with intellectual disabilities
Home and community-based services received as an alternative to institutional care
Hospital and prescription drug costs, but only when you were an inpatient in a nursing facility or receiving home and community-based services at the time²

Managed care premiums the state paid on your behalf during those periods are also included in the claim.² California limits its recovery to what federal law minimally requires rather than pursuing every category of Medi-Cal spending it could.¹

What Assets the State Can Actually Reach

For beneficiaries who die on or after January 1, 2017, DHCS can only recover from assets that pass through formal probate.² Property that bypasses probate is generally beyond the state’s reach, including:

Property held in a living trust
Real estate held in joint tenancy, which passes automatically to the surviving owner
Accounts with designated beneficiaries, such as life insurance and retirement accounts with named payees

A family home titled in a living trust or held in joint tenancy with a surviving family member will usually not be reachable. If you want to know whether a specific asset is vulnerable, check the title and the transfer mechanism for each piece of real estate and each financial account.

Older claims work differently. For beneficiaries who died before January 1, 2017, the state could pursue all assets owned at death regardless of how they were titled, including living trust assets and joint tenancy property.²

Who Is Completely Exempt

DHCS cannot file an estate recovery claim at all if the deceased beneficiary is survived by any of the following:¹

A spouse or registered domestic partner
A child under 21
A child of any age who is blind
A child of any age who is permanently and totally disabled as defined under the Social Security Act

These protections apply automatically. Heirs do not have to file paperwork or demonstrate hardship, and the exemption blocks the entire claim regardless of the value of the estate or the amount the state spent on care. If a Medi-Cal beneficiary leaves a surviving spouse or domestic partner, no part of the estate can be touched.

Liens on Your Home While You Are Alive

California does not seek repayment from a living beneficiary, but it can place a lien on a home in narrow circumstances. These are called TEFRA liens and apply only when a beneficiary is living in a nursing facility or other medical institution, is required to contribute income toward the cost of care, and has been determined unlikely to return home.³ The state must give notice and an opportunity for a hearing before placing the lien, and if the beneficiary returns home the lien must be dissolved.⁴

No TEFRA lien can be placed on the home if the beneficiary’s spouse lives there, if a child under 21, blind, or disabled lives there, or if a sibling with an equity interest has lived there for at least a year before institutionalization.⁵

Hardship Waivers

Heirs who do not qualify for an automatic exemption can apply for a hardship waiver if paying the claim would cause substantial hardship. DHCS may reduce or entirely waive the amount owed. You must submit the Application for Hardship Waiver (DHCS Form 6195) within 60 days of the date on the estate recovery claim letter, by email or mail.⁶

DHCS looks at factors such as whether the estate property is a homestead of modest value and whether enforcing the claim would deprive the heir of a primary residence, family farm, or small business that provides their main income. For deaths on or after January 1, 2017, the Legislature directed DHCS to treat a homestead of modest value as a basis for substantial hardship, subject to federal approval.¹ Send detailed financial documentation with the application. Miss the 60-day deadline and DHCS will generally proceed with collection.

If You Receive a Claim Letter

When DHCS sends an estate recovery notice, the notice identifies the amount the state intends to recover, explains the reason, and describes the heir’s right to request a hearing or apply for a hardship waiver.² You have more options than simply paying.

Check whether the beneficiary was survived by a spouse, domestic partner, or qualifying child. If so, notify DHCS. The claim should not have been filed.
Review how the estate assets are titled. For deaths on or after January 1, 2017, property that passes outside probate is generally not reachable.
Verify the amount. Request an itemized accounting if the services listed do not match the beneficiary’s actual care history.
Apply for a hardship waiver within 60 days if paying would cause substantial hardship.⁶
Request a hearing. Federal law gives heirs the right to contest the claim.

Start reviewing the claim as soon as it arrives. The waiver and hearing windows are short, and inaction usually means the state proceeds.

How Long the State Has to File

DHCS does not have unlimited time to pursue a claim. California courts have held that a three-year statute of limitations applies to estate recovery, running from the date of the beneficiary’s death. If no claim arrives within that window, heirs may have grounds to challenge a later one as time-barred. Families settling the estate of a beneficiary who died several years ago without any contact from DHCS should keep that deadline in mind.

1
California Legislative Information. California Welfare and Institutions Code 14009.5
2
Department of Health Care Services. Estate Recovery Program
3
Department of Health Care Services. Section 4.17 – Liens and Adjustments
4
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries, and Transfers of Assets
5
Centers for Medicare & Medicaid Services. Medicaid Estate Recoveries – TEFRA Liens
6
Department of Health Care Services. Hardship Waiver Application