If you are a senior, you may have heard a few horror stories about qualifying for Medi-Cal and/or about the potential threat Medi-Cal could pose to your estate after you are gone. Because there are numerous myths and misconceptions about Medi-Cal eligibility, it is not wise to rely on the accuracy of those stories. Instead, you should learn the truth about Med-Cal eligibility requirements as well as how the Medi-Cal Estate Recovery Program (MERP) could impact your estate after your death. Toward that end, the Medi-Cal asset protection team at the Northern California Center for Estate Planning & Elder Law explain when and how Medi-Cal can go after your estate.
Qualifying for Medi-Cal
Medi-Cal is the name of California’s Medicaid program. Your assets could be at risk both while you are alive and after you are gone if you ever need to rely on Medi-Cal – and there is a very good chance you will turn to Medi-Cal at some point during your retirement years. Your need to qualify for Medi-Cal will likely be the result of your corresponding need for long-term care (LTC). At an average yearly cost of well over $100,000 in California, and an average stay of over two and a half years, your LTC bill could easily exceed $300,000. Since neither Medicare nor most health insurance policies will cover LTC expenses, over half of all seniors currently in LTC count on Medicaid to cover the high cost of their care. Eligibility for Medi-Cal, however, depends on your income and assets. To qualify, the value of your “countable resources” must fall below the program’s limit which is as low as $2,000 for an individual. If you have countable assets that exceed the limit, your application will be denied and you will be required to “spend-down” those assets until their value drops below the limit. In essence, you may have to deplete your retirement nest egg before Medi-Cal will deem you eligible for assistance.
What Is the Medi-Cal Estate Recovery Program?
Unfortunately, even if you manage to get your Medi-Cal application approved, the potential threat to your assets is not completely past. Medi-Cal gets another crack at your assets after you are gone through the MERP program. The purpose of MERP is to allow the individual states to try and recover some of the funds they spend on Medicaid recipients after the recipient’s death. The MERP rules allow the state to file a claim against the recipient’s estate, for the amount spent on the recipient, during the probate of the estate. MERP affects Medi-Cal members who are 55 and older, or those of any age who are cared for at an institution, such as a nursing home. For Medi-Cal recipients who die on or after January 1, 2017:
- Repayment will be limited only to estate assets subject to probate that were owned by the deceased member at the time of death.
- Repayment will be limited to payments made, including managed care premiums paid, for nursing facility services, home and community-based services, and related hospital and prescription drug services received when the member was an inpatient in a nursing facility or received home and community-based services.
There are certain circumstances under which Medi-Cal will not seek reimbursement from your estate after your death, including:
- While your spouse/registered domestic partner is living
- If you are survived by a child who was younger than 21 at the time of your death
- If you are survived by a child of any age who is blind or disabled (as defined by the federal Social Security Act) as of the date of the Estate Recovery claim
- If pursuing the claim would create a substantial hardship. Requests for hardship exemptions must be filed within 60 days of the date the MERP claim letter is received.
The key to protecting your assets from both the Medi-Cal spend-down requirements and the Medi-Cal Estate Recovery Program is to consult with an experienced and qualified Medi-Cal planning attorney about incorporating asset protection tools and strategies into a Medi-Cal planning component within your estate plan.
Contact our Medi-Cal Asset Protection Team
Please download our FREE estate planning checklist. If you have additional questions or concerns regarding protecting your assets from Medi-Cal, contact the Medi-Cal asset protection team at the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.