The reason why Medi-Cal may be relevant to you as a senior citizen is because Medicare will not pay for a stay in a nursing home. According to the United States Department of Health and Human Services, about 35% of seniors will someday need this level of care.
In the greater Los Angeles area, you can expect to pay over a hundred thousand dollars a year for a private room in a nursing home, and the costs have been rising each year. If you are married, your family must be prepared to absorb multiple rounds of long-term care expenses.
This is a major part of the estate planning equation, because at the risk of sounding flippant, you don’t have to worry about the matter at all if you have nothing left to pass along to your loved ones.
Medi-Cal will pay for a stay in a nursing home, and in fact, most people that are receiving nursing home care in the United States are enrolled in the Medicaid program. Since it is intended for people with limited monetary resources, there are strict asset parameters.
In this post, we will share some specific numbers that you have to consider if you decide to implement a nursing home asset protection plan that centers around Medi-Cal eligibility.
This is the Medi-Cal asset limit. You cannot qualify if you have more than $2000 in assets, but everything that you own is not counted. If you have a wedding ring, engagement ring, and/or heirloom jewelry, it would be exempt, along with one motor vehicle.
You can maintain ownership of household belongings and personal effects. Up to $1500 worth of whole life insurance is allowed, along with the same amount set aside for final expenses. There is no limit to the amount of term life insurance you can carry since it has no cash value.
Your home is the most significant asset that is not counted by Medi-Cal. In other states in the union, there is an equity limit, but there is no such limit in California at the present time.
If you were to apply for Medi-Cal to pay for long-term care while your spouse was still capable of independent living, your partner would be entitled to a Community Spouse Resource Allowance. This is equal to half of the shared assets that are considered to be countable under Medi-Cal regulations.
The existence of the allowance is the good news, but the bad news is that there is a limit. At the time of this writing in 2019, the maximum Community Spouse Resource Allowance in California is $126,420. There are annual adjustments to account for inflation, so you may see a slightly larger figure next year.
Almost all of the income that is received by someone that is using Medi-Cal to pay for long-term care must be contributed toward the costs that are being incurred, with one exception. A healthy spouse that is relying on this income could continue to receive it. This is called the Monthly Maintenance Needs Allowance, but once again, there is a limit. Right now, it stands at $3161.
You can give gifts to others to get assets out of your own name to be able to qualify for Medi-Cal, but there is a 30 month look back period. All of the divestitures must be completed at least 30 months before you submit your application for Medi-Cal coverage.
This is the average private pay rate (APPR) for nursing home care that has been calculated by the program for 2019. If you violate the 30 month look back period by giving gifts, your eligibility is delayed. This $9337 figure is used to calculate the duration of the penalty period.
For example, let’s say that you gave away $93,370 a year before you applied for Medi-Cal. This would pay for 10 months of care using the APPR as a barometer, so your eligibility would be delayed by 10 months.
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We are here to help if you would like to discuss Medi-Cal planning with a licensed elder law attorney. You can send us a message to request a consultation appointment, and we can be reached by phone at 310-337-7696.