Q: What is Medi-Cal Planning?
A: Medi-Cal Planning is the systematic approach of helping you protect your home and preserve your assets while still qualifying for Medi-Cal benefits. Medi-Cal Planning is especially important to married couples who are unable to qualify for long-term care insurance or who are unable to pay the high premiums. Medi-Cal eligibility is determined by formulas based on the amount of income and resources available to the applicant. Medi-Cal planning involves the purchasing, transferring, conversion and/or liquidation of assets to enable you or your loved one to qualify under Medi-Cal’s test of income and resources.
Due to changes in federal laws enacted in 1996, almost anyone can qualify under Medi-Cal’s eligibility tests by working within the complex rules and regulations of Medi-Cal. Depending on the individual’s specific circumstances and objectives, the details of Medi-Cal Planning may be different from one individual to the next.
The Department of Health Services (DHS) also requires that a Medi-Cal applicant sign a declaration stating that they are aware of the possibility of a “Notice of Spend down”.
The rules which govern Medi-Cal eligibility are complex and change each year. Consulting a qualified Elder Law Attorney before transferring assets is the best course of action to avoid an improper transfer which may result in a period of ineligibility for up to 5 years.
Q: Is our property protected against Medi-Cal claims if all our assets are in a Living Trust?
A: No. A Living Trust does not protect you from Medi-Cal claims. Any non-exempt property owned by your living Trust is subject to Medi-Cal eligibility rules and recovery claims.
Q: How can I protect my assets and still qualify for Medi-Cal?
A: Since a married applicant who requires long-term care is only allowed to keep $2,000, most Medi-Cal plans would involve taking his or her name off of all community property accounts and/or transferring his or her separate accounts to the spouse who is ‘well’. Any excess resources above $2,000 for an individual, or $109,560 for a married couple, may be spent down by purchasing exempt or unavailable assets. Your home can be transferred to anyone of your choosing, not just your spouse, as long as it is an exempt asset at the time of transfer. This should be done as a step-transaction to avoid having the new owners pay unnecessary taxes along and capital gains. It is also possible to transfer income (i.e. pension benefits) to the well spouse.
Q: What is a Durable Power of Attorney?
A: The Durable Power of Attorney is the single most important document for Medi-Cal planning. This document will enable your agent to act on your behalf by implementing Medi-Cal strategies should you or your spouse require long-term nursing care.
Q: If I already have Medicare are my nursing home costs covered?
A: No. Medicare will only pay for skilled nursing care, not “custodial” care. Even then, Medicare usually only pays for the first 20 days. From days 21 through 100, you pay the largest portion of the bill, and after that Medicare stops paying all together.
Q: What assets can I keep while still qualifying for Medi-Cal?
A: You are allowed to keep your home, a car, and all exempt and unavailable assets.
Q: Can I transfer my assets to my family members in order to qualify for Medi-Cal?
A: Assets can be protected, but only in a special way. Medi-Cal has strict rules against improper transfers which result in a period of ineligibility of up to 5 years. Medi-Cal conducts a “look back” to different time periods to determine if any improper transfers have been made. Consult an experienced Medi-Cal Planning Attorney before attempting to transfer assets.
Q: Who can assist me in transferring or passing my assets to my heirs?
A: You should contact an Elder Law Attorney who understands the latest complex Medi-Cal rules and who can help you to both protect and preserve assets while still qualifying for Medi-Cal.
Q: Don’t we have to be living at the poverty level to qualify for Medi-Cal reimbursement of nursing home costs?
A: No. It’s a very common misperception that Medi-Cal is only available to low-income applicants. California residents with substantial assets can qualify for Medi-Cal and have their nursing home paid for by the state if they know how.
Q: Will I have to sell our family home to qualify for Medi-Cal?
A: Your family home is exempt for Medi-Cal eligibility purposes. However, it is most important to know that certain steps must be taken to prevent Medi-Cal from asserting an estate recovery claim against your home to later recover the amount of nursing home bills it paid on your (or your spouse’s) behalf.
Elder Law Services of California has an extensive background in Medi-Cal Planning, Estate Planning and Real Estate Law. They routinely assists those in need of creating or updating their wills, trusts, powers of attorney and other estate planning legal documents. The firm actively keeps their website up-to-date with the latest information and free resources pertaining to Medi-Cal Qualification and Medi-Cal Planning.
