New Rule to Limit Medi-Cal “Death Fees”

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Long Beach resident Hye-sook Kim, 50, bid a farewell last June to her mother. Even before Kim recovered from the psychological shock of her mother’s passing, she was requested to pay $9,700 to the California Department of Public Health (CDPH).

The letter from the CDPH mentioned that Kim’s mother has been a beneficiary of Medi-Cal for 10 years and that the responsibility to cover the unpaid costs is now levied on the family as she owned tangible assets. At the time of her death. Kim’s mother possessed a one-bedroom condominium unit, a 7-year-old vehicle and two bank accounts with remaining balance.

“I’ve already used my mother’s remaining money on her funeral and other costs,” Kim said. “It’s true that I inherited her assets, but I was surprised that I was due to pay almost $10,000 for a Medi-Cal cost.”

The policy that imposes payment on Kim is through the state department’s Estate Recovery Program (ERP). Any cost after a death of a Medi-Cal beneficiary is stipulated to be covered with remaining assets. The cost is proverbially called the “death fee.” The state department also stipulates that the recipient of a dead person’s remaining assets is responsible for providing the payment.

In fact, even those who have received basic treatment or prescription through Medi-Cal is categorized as its beneficiary. Hence, the so called “death fee” could commonly cost up to tens of thousands of dollars.

The state department reportedly requested a combined total of approximately $70 million in “death fees” through ERP. That is a $20 million rise compared to five years ago. Many speculate that the state department has been sternly enforcing the regulation to compensate for its reducing budget.

Following the public opposition to the “death fee,” a bill (SB 833) to mitigate ERP’s demands passed last year in the election.

January marks the beginning of SB 833’s effects. Under the changed regulation, the “death fee” cannot be imposed on widows and the subject of Medi-Cal services is now limited to nursing homes and community service hospitals.

In other words, the “death fee” is only applicable if the remaining assets are inherited. Also, property assets that cost less than 50 percent of the county’s average home price are excluded from the subject of the “death fee.”

However, the state department still has not provided a clear guideline on how it will enforce the changed regulation.

◇ What is the Estate Recovery Program?
It is essentially a demand for a refund on medical needs provided to the low income earners during their lifetime. The ones with remaining assets at the time of their deaths are obligated to return parts of them to the state government. The fees usually catch families’ off guard as even a short stay at the hospital could end up costing between $100,000 and $200,000.

Families are required to report the deaths within 90 days. If they are struggling financially to make the demanded payment, written proofs must be submitted.

By Brian Choi

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