Medicaid is a government run health insurance program. It is jointly administered by the federal government along with each state government.
We practice law in the state of California. In our state, the Medicaid program is called Medi-Cal.
This is a program that is only available to people who are financially needy. You must stay within very modest income and asset limits if you want to qualify for Medicaid or Medi-Cal.
Medicare is also a government health insurance program. People become eligible for Medicare coverage through the accrual of retirement credits. You can earn up to four credits each year while you are working and paying taxes. Once you have 40 credits, you earn Medicare eligibility. At the present time, the age of eligibility is 65.
Why would you care about Medi-Cal when you are going to qualify for Medicare? Unfortunately, Medicare does not pay for custodial care. This is the type of care that you would receive in a nursing home or assisted living community.
Because long-term care is very expensive, this gap presents a problem for many people.
Medicaid or Medi-Cal will pay for long-term care, and this is why it enters the picture, even if you were enrolled in the Medicare program.
Medi-Cal Spend Down
Most people who are eligible for Medicare coverage are going to retire with some financial resources. Because Medi-Cal is a need-based program, you can’t qualify if you have more than $2000 in countable assets.
We should point out the fact that some of your assets do not count toward this figure. You can retain ownership of your home and your personal effects are not countable. One vehicle that is used for transportation is not counted, and you can have a life insurance policy valued at up to $1500. Under program regulations, you can also retain up to $1500 to cover funerary expenses.
People aim toward Medi-Cal eligibility through a process called a spend down. You could essentially give your children their inheritances in advance. However, you must be very careful in doing this because, if it is done wrong, you may be denied eligibility. After you complete the spend down, you have very little left in your own name, and you can qualify for Medi-Cal to pay for long-term care.
This is well and good, but you cannot find out that you need long-term care on Monday, given away your assets on Tuesday, and become eligible for Medi-Cal on Wednesday, because there is a look-back period.
Around the country the duration of the look-back period is 60 months, and California is eventually supposed to adopt this same look-back. However, at the present time the California look-back is 30 months.
If you give away assets improperly within 30 months of applying for coverage, your application will be denied, and your eligibility will be delayed.
As a result of the look-back and other rules, it is important to work with an experienced and qualified elder law attorney when considering Medi-Cal planning.