As a senior, there is a very good chance that you, or your spouse, will need long-term care at some point. The cost of that care will not be cheap. Fortunately, Medicaid (Medi-Cal in California) may be able to help; however, you may have heard people talk about the Medi-Cal eligibility rules and fear those rules will cause your spouse to suffer. We will explain why you need not worry about your spouse if you need help from Medi-Cal.
Will You Need Nursing Home Care?
Although we all hope to live out our “Golden Years” in our own home, the reality is that the longer you live, the higher the odds are that you will eventually need nursing home care. When you reach retirement age, around age 65, you will already stand a 50 percent chance of eventually needing nursing home or another type of long-term care (LTC). If you are still here at age 85, those odds will have increased to a 75 percent chance of ending up in a nursing home. Your spouse, of course, shares the same odds as you with regard to the need for LTC.
How Will You Pay for Nursing Home Care?
Nursing home costs are high, and expected to increase in the years to come. As of 2018, the average cost of a year in a nursing home in California is over $100,000. In 20 years, experts predict those numbers to increase to about $210,000 a year and $17,500 per month. What makes the cost of nursing home care even more problematic is that neither Medicare nor most healthcare insurance will cover LTC expenses. Unless you can afford to cover LTC expenses out of pocket, that leaves Medicaid as your only source for assistance. Not surprisingly, over half of all seniors currently living in an LTC facility count on Medicaid to help them with their LTC costs.
Eligibility for Medi-Cal
Medi-Cal is the name given to California’s Medicaid program. If you need help paying for LTC, you may be able to turn to Medi-Cal for that help; however, you must first qualify for the program. Some applicants are automatically qualified for Medi-Cal because of their enrollment in other assistance programs, including:
- CalWorks (AFDC)
- Refugee Assistance
- Foster Care or Adoption Assistance Program
If you are not enrolled in one of those programs, however, you will need to meet Medi-Cal’s eligibility requirements for seniors, meaning you must meet the income and asset tests. The income limit is tied to the Federal Poverty Level and will change depending on which Medi-Cal category you apply under, your geographic location, and household size. The asset limit is where most seniors who failed to plan ahead run into problems. An individual applicant cannot own “countable resources” valued at over $2,000. A married couple faces an asset limit of just $3,000. Given these eligibility guidelines, many people fear that their spouse will be left destitute if they need to qualify for Medi-Cal. Fortunately, the Medicaid Spousal Impoverishment Rules prohibit that from happening.
Spousal Impoverishment Rules
Prior to the Spousal Impoverishment Rules, the couples’ income and assets were combined for the purpose of determining Medicaid eligibility. If a couple’s assets exceeded the program limit, those assets had to be “spent-down” (sold or transferred) until their value dropped below the limit. The rules now call for a “division of assets.” All assets belonging to either spouse are added together, except for exempt assets. One-half of the total is considered as the “spousal share” for the community spouse. The spousal share is protected from the Medicaid spend-down requirements, ensuring that those assets remain available for the community spouse to use. Each year, a minimum and maximum amount are set for the spousal share. For 2018, the maximum spousal share amount is $123,600, meaning that your at-home spouse can keep the first $123,600 in assets, and may be able to keep more if his/her income is below the Minimum Monthly Maintenance Needs Allowance (MMMNA). For 2018 this amount is $3,090. In addition, some assets are completely exempt, meaning they are not used to calculate an applicant’s “countable resources” for the purpose of eligibility.
Please download our FREE estate planning checklist. If you have additional questions about Medi-Cal eligibility, contact us at the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.