Ideally, you already incorporated Medi-Cal planning into your estate plan years ago so that you will be eligible for Medi-Cal (California’s Medicaid program) when you need it. What happens though if you did not plan ahead and now suddenly need to qualify for Medi-Cal? Let’s explore how last-minute Medi-Cal planning may still be able to help you.
Why Might I Need to Qualify for Medi-Cal?
Have you reached a point at which you need of the type of care that can only be provided by a nursing home? If so, you are not alone. At retirement age (age 65) we all stand close to a 70 percent chance of needing some type of long-term care (LTC) services before the end of our lifetime. As you have undoubtedly discovered, the cost of that care is not cheap. In California, the average cost of a year in LTC for 2021 is over $120,000.
The real problem, however, comes when you realize that you may be forced to cover those expenses out of pocket. Like many seniors, you may rely on Medicare to pay for most of your healthcare expenses; however, you will not be able to turn to Medicare for LTC expenses because Medicare won’t cover them. Neither will most private health insurance policies unless you purchased a separate long-term care policy. Not surprisingly, over half of all seniors currently in an LTC facility rely on Medi-Cal or help paying their bill. For Medicaid to help though, you must first qualify for benefits, and if you did not include Medicaid planning in your estate plan ahead of time, qualifying for Medi-Cal may be difficult.
Will I Qualify for Medi-Cal?
For most seniors, the problem they encounter when applying for Medicaid (Medi-Cal in California) is that they must meet the income and asset tests. The income limit is tied to the Federal Poverty Level and will change depending on which Medi-Cal category you apply under, your geographic location, and household size. The income limit is not where most seniors encounter a problem though. It is the extremely low asset limit that typically poses a problem for seniors who did not plan ahead. In most states, an individual applicant cannot own “countable resources” valued at over $2,000. A married couple faces an asset limit of just $3,000 if both need LTC. Medi-Cal does exempt certain assets, such as your primary residence and a vehicle; however, many seniors have accumulated a retirement nest egg full of non-exempt assets that easily exceed the countable resources limit. If your assets exceed the limit, your application will be denied and you will have to “spend-down” your assets before applying again, meaning you will be expected to use those assets to cover your LTC expenses until the assets are gone. Furthermore, Medi-Cal also imposes a “look-back” period (currently 30 months) that may prohibit you from transferring your non-exempt assets at the last minute in anticipation of the need to qualify for Medi-Cal.
Can Last-Minute Medi-Cal Planning Help Me?
The good news is that even if you did not incorporate Medi-Cal planning into your estate plan ahead of time, you may still be able to benefit from last minute Medi-Cal planning. You may not be able to protect all of your non-exempt assets, but you may be able to protect some of those assets. The key is to consult with an experienced and qualified Med-Cal planning attorney as soon as you realize you need to qualify for Medi-Cal. One goal will likely be to legally convert as many non-exempt assets as possible into exempt assets. For instance, because the equity in your home is an exempt asset (up to a limit), you might be able to take your savings and pay off your mortgage, thereby converting the non-exempt savings funds into exempt equity.
Please download our FREE estate planning checklist. If you have additional questions or concerns about last-minute Medi-Cal planning, contact us at the Northern California Center for Estate Planning & Elder Law by calling (916)-437-3500 or by filling out our online contact form.