Accepting the reality that you (or a loved one) need the type of care that can only be found in a long-term care facility is difficult enough. Facing that reality along with the realization that you cannot afford the care can be devastating. This is particularly true if you also failed to plan ahead to ensure that you would qualify for Medicaid if you need help covering the cost of LTC.
Why Is Qualifying for Medi-Cal So Important?
Like most seniors, you will probably rely on Medicare to cover most of your healthcare expenses. Unfortunately, however, Medicare only covers LTC expenses under extremely limited circumstances, and even then, only for a very limited period of time. Furthermore, most basic health insurance plans also exclude LTC expenses. Therefore, unless you purchased a standalone long-term care insurance policy prior to the need for coverage, you will be faced with the prospect of covering your LTC expenses out of pocket. For the average person, an entire retirement nest egg could be lost to LTC costs if forced to pay for them out of pocket. This is where the need to qualify for Medi-Cal comes in because Medi-Cal will help with LTC costs.
Will I Qualify If I Failed to Plan Ahead?
Medi-Cal is a federally funded and state administered healthcare program for low-income individuals and families as well as the disabled and aged. Because the program is intended to assist low income applicants, an income and asset threshold is used to determine eligibility. The asset limit is often as low as $2,000. If the value of your non-exempt assets exceeds that limit your application will be denied. Transferring valuable assets out of your estate when you realize you need to qualify for Medi-Cal is not an option because of the Medicaid five-year “look-back” rule (currently 30 months in California). In essence, the rule allows Medi-Cal to review your finances for the previous five years and asset transfers made for less than fair market value could trigger a corresponding waiting period by Medi-Cal.
Is It Too Late for Medi-Cal Planning to Help?
Of course, it is also best to plan ahead for the possibility that you will need to qualify for Medi-Cal in the future; however, there are some perfectly legal last minute Medi-Cal planning strategies that may still be able to help you if you suddenly need to qualify and did not plan ahead. One common last-minute Medi-Cal planning strategy involves converting a non-exempt asset to an exempt asset.
Medi-Cal exempts some assets, when determining your eligibility. The list of exempt assets will vary by state; however, most states exempt a primary residence. If you have a significant amount of cash or a valuable investment account and you still owe on a mortgage, paying down the mortgage can convert that cash/investment account from a non-exempt asset to an exempt asset. It is worthwhile to work closely with a Medi-Cal planning attorney before applying for benefits to see what last minute Medi-Cal planning options may be available to you.