One of the most common questions for clients receiving Medi-Cal benefits is, “will I lose my home?” This is a great concern, obviously, because for most people, their home makes up most of their life savings. A home may be the only thing you have left to pass on to your children. Since the home is the largest asset a couple is allowed to keep, while maintaining eligibility for Medi-Cal, it is also the primary target of estate recovery. So, what can you do to keep from losing your home to Medi-Cal?
How broke do I have to be to qualify for Medi-Cal in California?
In order to qualify for Medi-Cal in California, your income must be 138% of the federal poverty level, and your total countable assets less than $2,000 if you are unmarried. If both spouses are in a nursing home, the asset limit is $3,000. But, there are certain types of property or assets that are exempt, meaning they are not included in determining eligibility. Your home is one of those exempt assets, as long as the spouse continues to live there while the Medi-Cal recipient is in a nursing home. That exemption typically ends, however, when both spouses pass away. The home may then become susceptible to estate recovery.
What Is Estate Recovery under Medi-Cal law?
A law was passed in 1993 that gives each state the right to recover the amount it paid for the care of a Medi-Cal recipient, when that person dies. Because individuals have to be essentially broke in order to qualify for Medi-Cal, normally their home is the only asset of any value the person still owns upon their death. Once both spouses pass away, California’s estate recovery unit has the ability to take nearly any property the Medi-Cal recipient owned, which will likely include the home.
How to keep from losing your home to Medi-Cal?
A Medi-Cal recipient who is married, is allowed to transfer her home to her spouse, without any penalty. However, depending on the timing of the transfer, the recipient may be subjected to a period of eligibility, if the recipient requires nursing home care within five years of the transfer. The family residence is often the most difficult asset to protect. However, there are some strategies that can be considered.
A Medi-Cal Trust is a special purpose trust that can be used to shelter your home, while maintaining your eligibility for Medi-Cal. A Medi-Cal Trust is like other irrevocable trusts, but you can actually be the beneficiary, while your children or spouse are residual beneficiaries. The earlier you start planning for long-term care, the better off you will be. Whether you are facing long-term care issues for yourself or a family member, the time to plan is now.
If you have questions regarding Medi-Cal, or any other estate planning needs, please contact the Schomer Law Group either online or by calling us at (310) 337-7696.