There has been a great deal of confusion regarding the treatment of annuities versus the treatment of IRAs, work related pension funds, and other periodic payment plans under the Medi-Cal program. Some consumers and claims representatives from the Department of Health Services recovery unit are under the impression that all periodic payment plans are subject to recovery. However, this is simply not the case.

The Department cannot recover from an IRA, 401k or other work-related pension plans or annuities, unless the estate is named as the beneficiary or the funds revert to the estate.  Thus, it is important to review the beneficiaries of retirement funds if you are planning on applying for Medi-Cal and do not place such funds in a living trust. 

IRAs and 401ks are retirement plans, not annuities “purchased on or after September 1, 2004;” thus, the Department is prohibited from recovering from the remainder of these plans.

If a claims representative attempts to place a claim against an IRA or work related annuity of someone you know, please contact our office. We can provide you with information and resources to clarify the issue to the Department.

As for non-work related annuities, the Department published emergency regulations in 2004 allowing DHS to recover from “annuities purchased on or after September 1, 2004.” (Title 22, Article 19, §50960 (d)(1))

For more information check out our IRAs, Pensions & Annuities Under Medi-Cal fact Sheet.