Medi-Cal Planning for Long Term Care

Please note the following is just general information, and not legal advice. Please do not implement any of the following in your own situation without being properly advised by us or another competent estate planning attorney.

Who should consider planning for Medi-Cal to pay for nursing home care?

  • Those who have been diagnosed with a degenerative disease, such as Alzheimer's disease;

  • Elderly individuals concerned that if they have a stroke, or if some other disability afflicts them, their assets would be used up in paying for possible care in a nursing home.

  • What is Long Term Care under Medi-Cal?

    Medi-Cal is the California state version of what is called Medic-Aid in other states. It is funded primarily by the federal government, but is administered by the State. Medi-Cal pays for the medical care of those who have little income or assets. In particular, it will pay for long term care in a skilled nursing facility (but generally not for assisted living care or a board and care home). Medicare will only pay for part nursing care costs for the first 100 days, and only then if the individual was transferred directly from an acute care hospital. And unlike Medicare, Medi-Cal has no minimum age limit.  By Kevin Staker

    What are the asset limits of Medi-Cal?

    The "non-exempt" assets of the ill individual (the "applicant") must be under $2,000 in order to qualify for Medi-Cal benefits. What is exempt then is the key.

    The primary residence is exempt. This includes a mobile home or even an apartment building if the applicant lives in one unit. The residence is exempt even if the applicant lives in a nursing facility, so long as he or she intends to return to live there if possible. As of now, the home can be of any value. However, the rules will likely change soon to limit such value to between $500,000 and $750,000, depending upon the county in which the applicant resides.

    One Motor vehicle (of unlimited value), is exempt if used to benefit the applicant or is needed for medical reasons. In California, this would presently include even a motor home worth a couple hundred thousand dollars.

    Household items and other personal effects are exempt.

    Jewelry is exempt in any amount for a married person. For a single person, wedding rings, heirlooms, and other jewelry up to $100 in value are exempt.

    Life insurance is exempt for term policies, and for permanent policies of less than $1,500 in cash value.

    Burial plots are exempt. In addition, an irrevocable burial fund of any amount and a revocable burial fund if up to $1,500 are exempt.

    IRA's, work-related annuities, and other retirement plans are exempt for the applicant in certain circumstances. Such plans of a spouse are exempt in any event.

    Annuities are exempt in certain instances. Different rules apply for annuities issued before or after March 1, 1996.

    Business assets are exempt. However, rental real estate is not a business and so is a problem asset for the applicant and spouse.

    Assets of a spouse are exempt if they do not exceed the Community Spouse Resource Allowance (the "CSRA"), an amount determined by the government as an amount of assets the spouse needs for his or her own needs. Such amount is $109,560 in 2008. (Note: the exempt assets of a spouse, such as jewelry, are not counted toward the CSRA.)

    May I Give Away Assets?

    Gifting is an area in long term care planning that is presently very advantageous. However, it is extremely easy to make mistakes that result in long periods of Medi-Cal ineligibility, and so the advice of a competent attorney should be sought before any gifting is done. But with proper gifting, an applicant with significant assets may be able to qualify for Medi-Cal benefits.

    What are the Issues Regarding a Spouse?

    As mentioned above, the non-exempt assets of a spouse cannot exceed the CSRA. Reducing such assets to that limit one of the keys to planning for a married couple, and is an integral part of how we can assist you.

    Another issue is whether the income of the spouse in the nursing home will go to the well spouse or must instead be used to pay the nursing home costs. The Minimum Monthly Maintenance Needs Allowance ("MMMNA") is an amount of income the government determines is adequate for the maintenance of the well spouse. The MMMNA is presently $2,739 (in 2009). If the income of the well spouse exceeds this amount, any excess must be used to pay for the nursing home costs. However, it is possible to have the CSRA and MMMNA raised on an individual basis, by petitioning the Court, but you will need legal representation to accomplish this.

    It is also necessary to have legal assistance to deal with situations where the well spouse acquires significant assets, such as through an inheritance, after the ill spouse qualifies for Medi-Cal. It is important that such assets do not cause a subsequent period of ineligibility for Medi-Cal benefits.  By Kevin Staker

    Can Medi-Cal Take My Assets After I Am Gone?

    It is a common misconception that if an individual receives Medi-Cal benefits, the government will "take your home" or "put a lien on your home." However, Medi-Cal can recover their expenses after the death of the Medi-Cal recipient, or the death of their spouse, if married. We can assist our clients in possibly preventing such recovery by Medi-Cal, and preserving those assets instead for their family. It is vital that such planning be initiated as early as possible before the death of the applicant or spouse, ideally at the time one applies for Medi-Cal benefits.

    Are Some Loopholes Closing? Do I Need to Consider Acting Now?

    The Deficit Reduction Act (the "DRA") was signed by President Bush in February of 2006. The DRA makes major changes to the rules governing Medi-Cal, making it much more difficult to qualify for benefits.

    However, California has yet to implement the DRA. More than two years have passed since the DRA was signed, and California has yet to implement most of the new provisions. But now, California is finally showing signs of moving forward. Senate Bill 483 was passed in September 2008.  However, it will not be implemented until regulations are finalized, late 2010 at the earliest.  However, careful planning must be done ahead of time, and one should consider what can and should be done now before these new regulations take effect.

    Conclusion     

    The time is now to consider whether or not to take action to qualify for Medi-Cal to pay for long term care in a nursing home. The window of time to taking action is becoming shorter and shorter.  By Kevin Staker

    How Can I Find Out More?

    To learn more about planning for long term care under Medi-Cal, please do not hesitate to contact us at (805) 482-2282, or e-mail us at kgs@staker.com

    By Kevin Staker