Assisting families in Irvine, Orange County and throughout Southern California with eligibility and application for Medi-Cal.
Medi-Cal Overview
We understand and seek to help those who need Medi-Cal benefits and wish to minimize or avoid the expensive private pay rate of a nursing home set forth below. The purpose of this brief overview of “Long Term Care Medi-Cal”, which provides nursing home facility services, is to offer enough guidance to help you determine if you would like to arrange a consultation. Those who wish further detail are referred to the California Advocates for Nursing Home Reform website at canhr.org.
What is Medi-Cal?
Medi-Cal is a federal and California state financial need-based program designed to help pay for medical care for public assistance recipients and other low-income persons. Medi-Cal benefits include nursing facility services and home and community based services.
Federal and California Medi-Cal Law
The Deficit Reduction Act of 2005 (DRA) amended federal Medicaid law, effective 2/8/06. California Senate Bill 483 was signed on 9/26/08 and will amend the California Welfare and Institutions Code to implement the Medicaid provisions of DRA as soon as regulations are filed by the Department of Health Care Services with the Secretary of State and procedural requirements for adoption have been satisfied, estimated to take approximately one year. This article was written in 11/08.
Resource (Asset) Eligibility Rules for Medi-Cal
- Applicant may own non exempt assets worth no more than $2000
- Spouse of applicant may own non exempt assets worth no more than $104,400 (2008), (known as the community spouse resource allowance, adjusted each year for inflation)
Income Eligibility Rules for Medi-Cal
- Applicant is limited to $35/month as a personal needs allowance
- Spouse of applicant may retain $2610 (2008) per month (known as a minimum monthly maintenance needs allowance, adjusted each year for inflation). This is the amount of the applicant spouse’s income that may be allocated to his or her spouse, which when added to the spouse’s income, will not disqualify the applicant from Medi-Cal eligibility. The spouse may retain any amount of income received in his or her name alone without disqualifying the applicant for Medi-Cal benefits and without being required to contribute to cost of care.
Cost of Nursing Home Care
Individuals whose net monthly income is higher than $35 per month may qualify for the program if they pay or agree to pay the excess of their income on monthly medical costs. This is called the share of cost. Individuals eligible with a share of cost must pay or take responsibility for a portion of their medical bills each month before they receive coverage. Medi-Cal then pays the remainder, provided the services are covered by the program. This works much like an insurance deductible.
Some Strategies for Medi-Cal Eligibility
- Invest in Exempt Assets or Assets Unavailable for Eligibility such as :
- Principal Residence
Historically, the value of the principal residence was fully exempt if occupied by the applicant or there was an intention to return home. Proposed DRA regulations would establish a new $750,000 equity limitation with certain exceptions.
- Transfer of Home to Intentionally Defective Grantor Trust
- retain income tax benefits allows sale of home before death
- protect the home from Medi-Cal recovery of benefits after death
- protect equity in excess of $750,000 ?!?!
- may deny access to equity ?!?!
- IRAs and Work Related Pensions in Well Spouse’s Name
- IRAs and Work Related Pensions in Applicant’s Name with restrictions
- Certain Annuities (restricted and further controlled by DRA)
*Discussion of additional exempt or unavailable assets is beyond the scope of this brief article.
- Change Non-Exempt Income or Resources to Exempt Income or Resources
If the community spouse's monthly income is less than the MMMNA of $2,610, he/she may:
- receive an allocation from the applicant spouse's income in excess of $35 per month;
- file for a fair hearing to increase the CSRA of $104,400 to generate additional income;
- obtain a court order to obtain additional income-generating resources.
- Spend Down Assets to Resource Limits
- Gift of Assets to Resource Limits
Giving away resources will render an applicant ineligible for a period of time if the applicant enters a nursing home. The number of ineligible months is calculated by dividing the amount of the gift by the Average Private Pay Rate of a nursing home, published annually. For 2008, the Average Private Pay Rate was $5496. And the period of time in which the government may “look back” at the financial records of the applicant to verify gifts is being increased under the proposed DRA regulations from 30 months to 60 months.
*Certain recipients will not trigger a period of Medi-Cal ineligibility.
- Financial Planning Alternatives
- Reverse Mortgage to pay Long Term Care cost and reduce equity in home.
- Long Term Care Insurance to pay Long Term Care cost
- Other Irrevocable Trusts
- Estate Planning Document Issues
Your power of attorney and trust instrument should contain clauses allowing gifting, self dealing and amendment of the trust by one trustmaker should the other become incompetent. Otherwise, a conservator and substituted judgment motion with the court may be required to obtain same.
Common Mistakes Regarding Medi-Cal
- Thinking it is too late to plan when you can plan even after the move into the nursing home.
- Not seeking help from a qualified expert before applying for Medi-Cal.
- Ignoring important safe harbors created by Congress.
- Believing that the State will take your home if you go on Medi-Cal when that is not true although the State can place a Medi-Cal lien on your home to the extent that it is not exempt and you are attempting to sell it. Also, your home may be subject to an estate claim after your death to recover Medi-Cal benefits paid during your life.
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