Most clients believe that, in order to qualify for Medi-Cal, they must transfer their property to someone else, before they can apply for benefits. In reality, though, transferring certain assets at any time within five years of submitting your application may result in a delay in receiving benefits. However, with proper planning, you can retain control of your assets and still qualify for Medi-Cal benefits. One option is to use an annuity. You should first discuss this option with an experienced Medi-Cal planning attorneys to make sure the annuity is Medi-Cal compliant. Please note: Almost all annuities sold by annuity salespersons are NOT Medi-Cal compliant.
Understanding the requirements of Medi-Cal
Medi-Cal is a health care assistance program that provides benefits to residents of California who have low-income. Federal, state and local taxes are used to fund this program. All of those funds are used to help those individuals who are eligible to pay for covered medical expenses. With Medi-Cal, most recipients are not required to pay more than a small co-pay for covered medical care.
Eligibility for Medi-Cal benefits in California
Generally speaking, eligibility requirements for Medicaid (referred to as Medi-Cal in California) differ from one state to the next. Nevertheless, most states offer benefits for adults with children who live below a certain income level, women who are pregnant, seniors and people with disabilities. There are also other groups of individuals who may be eligible for Medi-Cal as well, so consult with an experienced and qualified Medi-Cal planning attorneys to see what your options are.
When California residents should start creating a Medi-Cal plan
It is always better to start Medi-Cal planning as soon as you can so you are better able to plan ahead and ensure that you will qualify for Medi-Cal. However, it is not too late to start creating your plan, as there may still be some options available to you. Even if you suddenly find yourself in need of Medi-Cal, it is never too late to discuss your needs with a Medi-Cal planning attorney.
Sacramento Medi-Cal planning attorneys know Medi-Cal planning is crucial
Anyone who may find themselves in need of long-term care you seriously consider Medi-Cal planning. As you may already know, Medi-Cal is California’s need-based health care benefits program. That means, in order to become eligible for Medi-Cal benefits, you can only have financial resources of $2,000 or less. While your primary residence and other specific property are not included in determining the amount of your resources, it is still likely that most people will exhaust all of their savings before Medi-Cal will start paying for the cost of long-term care. But, if you start Medi-Cal planning now, you will be better able to protect your assets and prevent that from happening.
How does using an annuity help with Medi-Cal planning?
An annuity is a fixed sum of money paid to an individual every year for a specific period of time. If your annuity is considered Medi-Cal compliant that means it qualifies as a special type of annuity that will not put your Medicaid eligibility at risk. In many cases, a Medi-Cal compliant annuity is a specific kind of deferred annuity, known as a Single Premium Immediate Annuity (SPIA), which can be converted so that it pays out over the annuitant’s life expectancy. There are specific requirements to be Medi-Cal “compliant”.
What makes this type of annuity Medi-Cal compliant?
In order to be considered Medi-Cal compliant, among other things, the annuity has to be irrevocable and non-assignable. That means it cannot be modified once it is established and its proceeds cannot be assigned or transferred over to anyone else.
It must also be actuarially sound, which means there must be sufficient funding and insurance to cover any losses or related costs, either already known or anticipated. The annuity must provide for equal payments with no deferral or balloon payments. Finally, the annuity must identify the Medi-Cal program as the primary beneficiary to the extent that medical assistance benefits are provided.
How is a Medi-Cal annuity beneficial in planning?
As experienced attorneys can attest, there can be benefits to having a Medi-Cal compliant annuity as part of your plan. As you have seen, if you ever need long-term nursing home care, it is important to either have no assets at all or to have the right assets that will allow you to remain eligible for Medi-Cal benefits. Without the right types of assets, you may be required to “spend down” your assets in order to meet Medi-Cal’s eligibility requirements.
The Medi-Cal compliant annuity, on the other hand, is not considered a countable asset. This means that, as long as you reposition your countable assets into a properly structured Medi-Cal annuity, then you can still become eligible for Medi-Cal benefits.
If you have questions regarding annuities, or any other Medi-Cal planning 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.