Nursing home care can be very expensive. Many private health insurance policies don’t cover these long-term care services. For California residents who need long-term care, Medi-Cal is the most common source of funding. In fact, Medi-Cal covers nursing home care expenses of nearly 65% of Californians residing in nursing homes. However, applying for and receiving assistance from Medi-Cal takes planning. Getting your parents prepared for the potential need for long-term health care, nursing home planning is a must.
Medi-Cal and nursing home care
Medi-Cal is California’s state Medicaid program. Like all other Medicaid programs, it is funded by both federal and state funds but run by the State. The California Department of Health Care Services (DHCS) manages long-term care programs in California, including nursing home services. In general, skilled nursing facilities offer round-the-clock skilled nursing care in addition to other supportive services. Nursing homes are typically rather expensive, averaging over $8,000 per month in California. Most people cannot afford to pay their own nursing home expenses. That is where Medi-Cal benefits come in.
Payment for “medically necessary” nursing home services
Med-Cal benefits are limited when it comes to nursing home benefits. Medi-Cal only pays for nursing home services when those services are deemed “medically necessary.” California defines that term “medically necessary” as “reasonable and necessary to protect life, to prevent significant illness or significant disability, or to alleviate severe pain.” In order for Medi-Cal to pay for a nursing home stay, the patient’s treating physician must prescribe that nursing home case based on the need for continuous, around-the-clock skilled nursing care services. This type of care may also be referred to as “intermediate care.”
Limitations on income and assets to be eligible for Medi-Cal
Based on the Affordable Care Act, the income limit for Medi-Cal is 138% of the Federal Poverty Level, which is about $16,100 for an individual and $32,900 for a family of four. The Affordable Care Act eliminated the asset test that was previously used to determine eligibility for most Medicaid applicants who are elderly or disabled. However, there are still limitations on assets in order to qualify for Medi-Cal, which are $2,000 for an individual and $3,000 for a couple.
Only certain assets are counted towards your asset limit. Your residence will not be counted if your spouse still lives there or if you intend to return to that residence when you leave the nursing home. Other assets that are generally not counted include one vehicle, personal belongings, and small burial or life insurance policies. The rules concerning “exempt” assets are complex and it would be best to work with an experienced attorney to maximize the planning opportunities.
You may be able to “spend down” your assets
You may be allowed to “spend down” your assets so that you qualify for Medi-Cal. “Spending down” means you can use your assets to pay off legitimate debts or expenses. However, you must be careful. If you feel you need to spend down your assets, consult with a Medi-Cal planning lawyer first in order to avoid illegal transfers and a penalty period that can affect your benefits.
Estate recovery after your death
Once you die, though, there is a possibility that the State will file a claim against your home and certain other assets in order to recoup the benefits paid for your care from your estate. This is known as “estate recovery.” In most cases, the only property of any substantial value that a Medi-Cal recipient has at the time of his or her death is the home. But, there are ways to protect your home from estate recovery. Consult an experienced and qualified elder law attorney as soon as possible to determine your options.
Download our FREE estate planning checklist today! If you have questions regarding nursing homes, or any other elder law issues, contact the Northern California Center for Estate Planning and Elder Law for a consultation, either online or by calling us at (916) 437-3500.