Simply because you are healthy right now doesn’t mean you may not need long-term care when you get older. This is a common misconception shared by many. The truth is, you don’t have to be sick to need Medi-Cal planning. You may not have health issues at the moment, but who can predict how healthy they will be in 40 years? An unexpected injury could also leave you with health issues that require long-term care as well. In fact, more than two-thirds of all individuals over the age of 65 need long-term care at some point in their lives. It would be a mistake to overlook Medi-Cal planning. For those who are not familiar, the Medi-Cal program is California’s version of the Medicaid (not Medicare) program.
Even healthy people may need long-term care
So many people ignore the fact that sickness is not the only reason you may need long-term care. For instance, if you suffered a terrible injury following an automobile accident, there is certainly a possibility that you will need long-term care in order to fully recover from that injury. In many cases, loved ones are admitted to nursing homes because of the need for daily assistance with activities such as dressing and grooming, simply as a result of aging. In other words, you cannot simply rely on your relative good health at the present. Your circumstances could change and you should be prepared.
Health insurance often does not cover the cost of long-term care
Unfortunately, far too many people misjudge the real cost of long-term care, which is typically rather expensive. The average annual rate of long-term care in California is more than $94,000. Add to that the likelihood that nearly half of the California citizens age 65 and older need long-term care for approximately five years. That can be overwhelming enough. Yet, there is a common misconception that Medicare and private health insurance will be sufficient to cover the costs of long-term care. In reality, they cover very little of these costs.
Understanding the Medicare insurance program
Medicare is a federal health insurance program available for individuals who are age 65 and older, disabled, or dialysis patients. Eligibility for Medicare is not based on need or income. Instead, Medicare recipients are required to pay a portion of their medical expenses through deductibles, along with small monthly premiums for necessary non-hospital coverage.
Types of Medicare coverage available
Medicare is divided into two basic plans that provide different types of coverage. Medicare Part A is an insurance plan for health care services provided by hospitals, skilled nursing facilities, home health care and hospice care. On the other hand, Medicare Part B is similar to basic health insurance which covers doctor visits, outpatient hospital care, and other medical services.
So, what is Medi-Cal?
One of the primary differences between Medicare and Medi-Cal is that Medi-Cal is an income-based or needs-based healthcare assistance program. Federal, state and local tax funds are used to aid eligible individuals with paying their medical expenses. Generally, Medi-Cal recipients are only required to pay a small co-payment for covered medical expenses, if anything at all. Medi-Cal will typically pay for some in-home services, but only if a physician certifies that home care services are actually needed for specified medical reasons.
How is Medicare different from Medi-Cal?
Medicare is different from Medi-Cal in that Medicare benefits are provided by private companies through contracts with Medicare. Whereas Medi-Cal is run by the state. Since Medicare is a federal program, eligibility and benefits are the same all over the country. Although Medi-Cal is not uniform in every state, coverage is typically available for eligible adults with children living below a certain income level, pregnant women, seniors and individuals with disabilities.
The benefit of Medi-Cal planning
The purpose of Medi-Cal benefits is to assist low-income California residents in paying for medical services. Because Medi-Cal is a needs-based program, recipients can have no more than $2,000 in assets. The goal of Medi-Cal planning is to keep you from exhausting all of your resources in order to be eligible for benefits.
Also, if an applicant for Medi-Cal gives away property or assets right before submitting an application, those transfers of property can be seen as fraudulent and result in your benefits being delayed or denied. However, with careful Medi-Cal planning, you can avoid the appearance of fraudulent transfers.
Download our FREE estate planning checklist
If you have questions regarding Medi-Cal planning or any other elder law needs, contact the Northern California Center for Estate Planning and Elder Law for a consultation, either online or by calling us at (916) 437-3500.