Like many seniors, you may find yourself faced with the need to qualify for Medicaid for the first time in your life. Having never before needed to rely on Medi-Cal (California’s Medicaid program), you may know very little about the program. To get you started,we will explains what you need to know about Medicaid.
- Long-Term Care Costs Prompt the Need to Qualify for Medicaid. You are not alone! As of 2020, the average cost of a year in long-term care (LTC) in California is over $112,000. Although most seniors rely on Medicare to cover health care expenses, Medicare explicitly excludes LTC expenses as do most private health insurance policies. For over half of all seniors currently in LTC it leaves them turning to Medi-Cal for help covering the high cost of long-term care.
- Medicaid Often Covers Alternatives to LTC. For seniors who cannot safely remain in their own home, yet do not need the level of care provided by a nursing home, Medi-Cal may also cover alternatives such as assisted living, community-based care, and even Home-Based Supportive Care (HBSC).
- Asset Transfer Prior to Applying Can Trigger a Waiting Period. If you apply for Medi-Cal, your finances will be subject to scrutiny for the 30 month period prior to the date of your application. Any asset transfers completed during that time period for less than fair market value could trigger a penalty in the form of a waiting period. The length of the waiting period is calculated by dividing the value of your excess assets by the average monthly cost of LTC in your area.
- Your Spouse Will Not Be Left Destitute. A common myth holds that a spouse who remains in the community will be left with nothing when the other spouse turns to Medi-Cal to help pay for long-term care. It is just that – a myth. When one spouse needs long-term care, instead of combining the couples’ assets for the purpose of Medi-Cal eligibility, the Medi-Cal program allows for a “division of assets.” The spousal share (which fluctuates by state and changes yearly) is protected from the Medi-Cal spend-down requirement, leaving them available for use by the community spouse. In addition, the “Minimum Monthly Maintenance Needs Allowance,” or “MMMNA” allows the community spouse to keep part of the institutionalized spouse’s income in some cases if the community spouse’s monthly income is low.
- Some Assets Are Exempt When Determining Eligibility for Medi-Cal. Eligibility for Medi-Cal depends, in part, on an applicant’s income and “countable resources.” If either is over the program limit, your application will be denied. The countable resources (asset) limit is very low — $2,000 for an individual in most states. Fortunately, some assets are exempt, meaning they are not taken into consideration when determining your eligibility. In California, the following are examples of exempt assets:
- One home IF you are planning to return OR a spouse, a child under 21, or a disabled person resides in it.
- One vehicle
- An irrevocable funeral trust
- Life insurance policy
Contact Us
Please download our FREE estate planning checklist. If you have additional questions or concerns about qualifying for Medi-Cal, 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.
Timothy P. Murphy is an estate planning and elder law attorney whose practice emphasizes helping people to build, preserve and pass on their wealth. He works with his clients to accomplish their goals while avoiding unnecessary court proceedings and minimizing or eliminating exposure to death taxes.
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