Medi-Cal is a “payer of last resort” which means that all other sources of payment for an applicant’s medical care, must be exhausted before Medi-Cal will begin to pay for long-term care expenses. If you give away any of your property or assets shortly before applying, you may be ineligible for long-term care benefits for a five-year period after your application is accepted. In determining whether this penalty period applies to you, the Medicaid agency will scrutinize any transfers you made during the five years prior to your application, no matter how well-intentioned they may have been. This is where Los Angeles Medi-Cal planning becomes important, particularly the child caretaker exception. Here is what you need to know.
How Does the Five-Year Look Back Period Work?
The “look back” period beings when you apply for Medicaid, not on the date you transfer assets or make gifts. The length of time you remain ineligible or the “penalty period,” is contingent on the value of the property you transferred. The Medi-Cal agency will divide the amount of the assets you transferred by the average monthly cost of nursing home care in your area. This is one of the many reasons why Los Angeles Medi-Cal planning is so important.
Let’s say, for example, you transferred a house to your son that was worth $100,000. If the average cost of nursing home care in your area is $10,000 a month, then your penalty period would be 10 months. However, there are exceptions where certain transfers are allowed under law. One of those is the child caretaker exception.
What is the Child Caretaker Exception?
The child caretaker exception allows a parent in need of long-term care to transfer their home to an adult child who is providing care for them without violating the Medi-Cal prohibition on transferring assets. The benefits of this exception are two-fold. Adult children or Medi-Cal eligible parents can continue to take care of their parent at home for as long as they can and be compensated for providing that care. The parent will not be forced to sell their home in order to cover the costs of nursing home care. In order to benefit from this useful exception to the Medi-Cal look back rule, you must be able to establish that you meet certain requirements.
The Adult Child Must Have Resided with the Parent for 24 Months Prior to Application
First, the adult child must be able to establish that he or she has lived in the parent’s home for two-years (24 months) prior to the parent being admitted to the long-term care facility. In order to establish this, you will need to submit utility bills or other documents that indicate the adult child resides at the address. One of those documents must be dated 24 months prior to the application for Medi-Cal benefits and the other dated at least one month prior. If you properly engaged in Los Angeles Medi-Cal planning you can be prepared to use this exception.
The Adult Child Must Be Caring for Their Parent
Another important requirement for this exception to apply is that the adult child must actually be providing care for the parent. That means more than simply living in the home and picking up prescriptions. It means providing the level of care necessary to keep the parent from needing to be admitted to a nursing home. The best way to establish this requirement is being met is to obtain a signed statement from your parent’s primary care physician documenting the type of care needed and provided by the adult child. Specifically, the written verification from the physician should include a statement that the parent’s medical condition requires long-term care because he or she is unable to perform daily living activities without assistance.
Other Important Limitations on Using the Exception
In order to minimize abuse of this important exception, it only applies to adults who are biological or adopted children of the Medi-Cal applicant. That means nieces, nephews, grandchildren or other family members are not eligible for this exception regardless of whether they meet all the other criteria.
Also, the home that is protected by this exception must be the parent’s primary residence and the adult child must live in that same building with the parent. In other words, the only transfer that will be allowed is the primary residence, not a vacation home.
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