Medicaid Estate Recovery in California: Exemptions and Waivers

Medicaid estate recovery in California is the state’s process for reclaiming what Medi-Cal paid for a person’s long-term care after they die. The Department of Health Care Services (DHCS) can file a claim against a deceased recipient’s probate estate for the cost of nursing facility care, home and community-based services, and related hospital and prescription drug costs paid after the recipient turned 55.¹ Since Senate Bill 833 took effect on January 1, 2017, the state has limited recovery to what federal law requires, so fewer assets and fewer services are on the table than under the old rules.²

Which Medi-Cal Services Trigger Recovery

Not every Medi-Cal benefit is recoverable. For recipients age 55 and older, only nursing facility services, home and community-based services, and related hospital and prescription drug costs count.¹ States may expand recovery to cover all Medi-Cal services, but California opted out. The legislature directed DHCS to “limit Medi-Cal estate recovery only for those services required to be collected under federal law.”²

Doctor visits, outpatient care, and prescriptions unrelated to long-term care are not recoverable. If your family member had only routine Medi-Cal coverage and never needed a nursing facility or in-home supportive services after age 55, the estate likely has no exposure. One boundary to know: a recipient who was an inpatient in a nursing facility may be subject to recovery regardless of age.³

What Assets DHCS Can Reach

This is where SB 833 changed everything. Before 2017, California used an expansive definition of “estate” that swept in property passing outside probate through living trusts, joint tenancy, and similar arrangements. For anyone who died on or after January 1, 2017, recovery is limited to real property, personal property, and other assets in the recipient’s probate estate.⁴

The most common target is a home owned solely by the deceased recipient. If it must pass through probate, DHCS can claim against it. Bank accounts, investment accounts, and personal property titled only in the recipient’s name face the same risk. The test is simple: if the asset goes through probate, DHCS can reach it.⁵

Assets that bypass probate are generally safe. Property held in a properly funded living trust, real estate in joint tenancy, bank accounts with payable-on-death designations, and retirement accounts or life insurance policies with named beneficiaries all pass outside probate and outside DHCS’s reach.⁴ The word “properly” is doing real work here. A trust that was never funded, a retirement account with no beneficiary listed, or a life insurance policy naming the estate itself will drop back into probate and become recoverable.

Heirs are not personally liable. DHCS claims run against the estate, and family members do not owe anything from their own pockets. The executor or administrator, however, has a legal duty to address DHCS’s claim before distributing assets, and distributing too early creates personal exposure for the executor and lets DHCS pursue the improperly transferred property.⁶

Exemptions That Block Recovery Entirely

California recognizes three categorical exemptions. They apply automatically. If one fits, the estate is protected no matter how large it is.

Surviving spouse or registered domestic partner. DHCS cannot pursue recovery during their lifetime. It does not matter what the estate holds or how it is titled.²
Child under 21. A surviving child younger than 21 at the recipient’s death blocks the claim.⁷
Blind or disabled child of any age. A surviving child of any age who meets the Social Security Administration’s definition of blindness or disability as of the date of the claim exempts the estate. Proof of the child’s condition must be submitted to DHCS.⁷

Families rely most on the surviving-spouse exemption. It delays recovery indefinitely, and if the surviving spouse spends down or restructures the assets during their own lifetime, the claim can disappear altogether. After the surviving spouse dies, DHCS may pursue recovery from whatever remains of the original recipient’s assets.

Hardship Waivers and the Caregiver Exemption

Where no categorical exemption applies, DHCS can still waive the claim if enforcing it would cause substantial hardship. A waiver request must be submitted within 60 days of the date on the claim letter.⁵ Missing that deadline is fatal to the application, so treat the clock as starting the day the letter arrives.

California’s regulations list situations that qualify. You can request a waiver if you need equity in the property to make it habitable or to cover basic necessities like food, shelter, or medical care.⁸ The legislature also directed DHCS to waive claims when the estate consists of a homestead of modest value, with the threshold set locally based on average home prices in the county where the property sits.²

A separate provision protects caregivers and is often missed. DHCS will waive its claim against an applicant’s share of the estate if the applicant provided care to the deceased for two or more years, that care prevented or delayed admission to a nursing facility, and the applicant lived in the recipient’s home while providing it. The caregiver need not be a relative, but must be a dependent, heir, or survivor of the deceased.⁸ Documentation is the difference between approval and denial. Physician statements, care logs, and medical records showing the recipient’s condition required that level of care all help.

Every hardship application is evaluated on its own facts. Submit income records, housing costs, and medical expenses with the request.

The 90-Day Notice Requirement

Whoever handles the deceased recipient’s affairs — an executor, a beneficiary, or a family member in possession of the decedent’s property — must give DHCS written notice of the death within 90 days, along with a copy of the death certificate.⁹ Notice can be submitted online at dhcs.ca.gov/ER or mailed to the Estate Recovery Program at P.O. Box 997425, Sacramento, CA 95899-7425.¹⁰

Notice to any other agency does not count. Telling the county social services office, Social Security, or the coroner does not satisfy the rule. DHCS must get its own written notice.¹⁰ Skipping this step does not make the claim go away; it just delays and complicates the probate.

Challenging a Claim You Think Is Wrong

After DHCS issues a claim, the estate representative can request an itemized statement of every service DHCS paid for. Errors are common enough to be worth checking: services billed during periods of ineligibility, duplicate charges, or amounts attributed to the wrong person. DHCS bears the burden of proving the amount it claims.

If the claim is wrong or an exemption applies, the first step is a reconsideration request directly to DHCS, submitted within 60 days of the claim letter with supporting documentation.⁵ If DHCS denies reconsideration, the next step is a hearing before California’s Office of Administrative Hearings, where an administrative law judge decides whether the claim stands. Legal representation is not required but helps in complex cases, particularly disputes about how assets were titled or whether the caregiver exemption applies. An unfavorable OAH decision can be taken to Superior Court, though court challenges get expensive quickly.

Protecting Assets Before It Is Too Late

The most effective protection is keeping property out of probate. A properly funded revocable living trust, real estate held in joint tenancy with a right of survivorship, and financial accounts with designated beneficiaries all bypass probate and fall outside DHCS’s reach under the post-2017 rules.⁵ “Properly funded” is the operative phrase. A trust that exists on paper but was never retitled with the recipient’s assets does nothing.

Review beneficiary designations on life insurance, retirement accounts, and bank accounts. If an account names the estate as beneficiary, or names no one at all, the funds flow into probate and become recoverable. Naming a specific person is a simple change that can protect significant assets.

Once a recipient has entered long-term care the options narrow, but they do not vanish. The categorical exemptions operate automatically. The caregiver exemption rewards families who kept a loved one at home before institutionalization. Hardship waivers exist for situations where recovery would cause genuine financial harm. None of these protections require expensive legal strategies, but all of them require knowing the deadlines and getting documentation in on time.

1
Office of the Law Revision Counsel. 42 USC 1396p – Liens, Adjustments and Recoveries
2
California Legislative Information. California Welfare and Institutions Code 14009.5
3
California Legislative Information. California Welfare and Institutions Code WIC 14009.5
4
Medi-Cal Handbook. Estate Recovery
5
Department of Health Care Services (DHCS). Estate Recovery Program
6
California Legislative Information. California Probate Code 9000
7
California Department of Health Care Services. Medi-Cal Estate Recovery Informational Brochure
8
Cornell Law School. Cal. Code Regs. Tit. 22, 50963 – Substantial Hardship Criteria
9
California Legislative Information. California Probate Code 215
10
Department of Health Care Services. Notice Regarding Medi-Cal Estate Recovery Program