Many people make it through their entire working years without ever needing to turn to Medi-Cal (California’s Medicaid program) for help with healthcare expenses thanks to employer-sponsored or privately funded health insurance. If you are one of those people, you may find that you do need to rely on Medi-Cal as a senior if you need long-term care because of the prohibitive cost of that care. With that in mind, the Sacramento Medi-Cal attorneys at the Northern California Center for Estate Planning & Elder Law have put together five things you probably didn’t know about Medi-Cal — but that you need to know.
- Medi-Cal will cover long-time care expenses. If you are faced with the need to pay for long-term care (LTC) during your retirement years, you will quickly figure out that neither Medicare nor most private health insurance policies will pay for LTC. At an average yearly cost of over $100,000 in the Sacramento area, this can be a huge problem for a senior who needs LTC. In fact, for many seniors, it can result in their retirement nest egg disappearing quickly unless they are eligible for Medi-Cal.
- Medi-Cal imposes very low income and asset limits when determining eligibility. Medi-Cal is considered a “needs-based” program, meaning that it is intended to help low-income individuals and families with healthcare expenses. Consequently, Medi-Cal imposes both income and assets limits when determining an applicant’s eligibility for the program. The income limit is tied to the Federal Poverty Level that is applicable to an applicant’s household size and geographic area. The “countable resources” (assets) limit dictates that an applicant cannot own assets valued at more than the limit or the application will be turned down. Depending on which Medi-Cal program you are applying for, the asset limit could be as low as $2,000 for an individual applicant. If the value of your countable resources exceeds the program limit, your application will be denied and you will be forced to “spend down” those assets, effectively requiring you to rely on your retirement nest egg to pay your LTC expenses. Only when your countable resources drop below the limit will Medi-Cal start helping pay for your LTC bill. Of course, by then your retirement nest egg is all but gone if you failed to plan ahead.
- California’s Medi-Cal program has a 30 month – instead of a 60 month –“look-back” period. There was a time when you could simply transfer valuable assets to a family member immediately prior to applying for Medi-Cal to avoid being rejected because of the asset limit. Today, most state Medicaid programs employ a 60-month “look-back” rule that prevents such assets transfers. In California, however, the Medi-Cal look-back rule only imposes a 30 month look-back period. The rule allows Medi-Cal to review your finances for the 30 month period prior to applying. Any asset transfers made for less than fair market value could result in the imposition of a waiting period before Medi-Cal will approve your application.
- Your spouse will not be left without resources if you need to qualify for Medi-Cal. Contrary to what you may have heard, your spouse (referred to as the “community spouse”) will not be left without income nor resources if you need help from Medi-Cal. While that was once the case, the Medicaid Spousal Impoverishment Rules now prevent that from occurring. Instead, your spouse will likely be able to keep a significant amount of assets and possibly even some of your income when you enter LTC.
- Your asset could still be at risk from Medi-Cal after you are gone. The Medi-Cal Estate Recovery Program (MERP) allows the state to pursue claims against your estate after your death if the state paid for your LTC through Medi-Cal while you were alive. Each state has its own set of MERP rules; however, most states, including California, exempt some assets under certain conditions. The best way to protect against Medi-Cal Recovery is to consult with an experienced and qualified elder law attorney BEFORE the Medi-Cal benefits recipient dies.
Contact Sacramento Medi-Cal Attorneys
Please download our FREE estate planning checklist. If you have additional questions about Medi-Cal, or you wish to discuss incorporating a Medi-Cal planning component into your estate plan, contact us at the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.
Timothy P. Murphy is an estate planning and elder law attorney whose practice emphasizes helping people to build, preserve and pass on their wealth. He works with his clients to accomplish their goals while avoiding unnecessary court proceedings and minimizing or eliminating exposure to death taxes.
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