Overview of Medi-Cal Planning Strategies
To be able to take advantage of the most effective Medi-Cal planning strategies, you may need to make plans to get covered by Medi-Cal at least thirty months before you actually need to get nursing home care. Medi-Cal currently has a 30 month lookback rule which results in your temporary disqualification from coverage if you have made transfers of assets within that time period before trying to get covered. Since Medi-Cal planning often involves asset transfers in most cases, you should act early. You could still potentially protect some of your assets if you have waited, but effective Medi-Cal planning becomes harder and fewer assets can be saved if you have waited until your need for nursing home care is imminent before you begin making your plans.
Some of the different Medi-Cal planning strategies you can consider include:
- Reduction or elimination of debts. Paying off of mortgages, loans, credit cards and other forms of debt is often a good strategy as available funds must typically be used to pay a patient’s “share of cost” once Medi-Cal benefits are approved.
- Spending down of assets. It is generally permissible to spend a prospective Medi-Cal applicant’s funds on goods and services that directly benefit them such as paying for final arrangements, home improvements, purchase of needed items and payment of professional services such as health care, legal and accounting fees.
- Using various types of special trusts. Trusts generally must be irrevocable and allow you limited or no control over trust assets in order to protect your wealth and ensure it does not count as a resource for Medi-Cal eligibility.
- Purchasing annuities.You may be able to purchase an immediate annuity in order to turn countable assets (the money used to buy the annuity) into an income stream.
- Using caregiver agreements.If you suspect nursing home care will soon be needed, you could create a caregiver agreement with an adult child in which the child is paid for care provided. The money paid to the child is not considered a gift that causes Medi-Cal disqualification, but the amount must be reasonable.
