Before we dig deeply into the details with regard to the advantages that Californians enjoy, we should explain why Medi-Cal should be on your radar in the first place. The vast majority of seniors will someday need living assistance, and about 35% will eventually reside in nursing homes.
These facilities are extremely expensive. At the time of this writing in 2019, here in the greater Los Angeles area, you are looking at over a hundred thousand dollars per year, and it could be much more depending on the facility. Costs have been rising each year, so the numbers may be even larger if you need this level of care in 20 years or so.
If you are thinking that you are not too concerned because you can always rely on Medicare to pay for long-term care if you need it, you’re not alone. Most people would assume that this government health insurance program would pay for long-term care, but this is considered to be custodial care. Medicare will not pay for convalescent care, but it doesn’t cover custodial care.
On the other hand, Medi-Cal will pay for a stay in a nursing home, and this is why it may be quite relevant even if you will qualify for Medicare when you reach the age of 65. Since it is ostensibly intended for people with limited financial resources, there is an asset limit of just $2000.
When you see this limit, you may feel as though it would be impossible to qualify, but some things do not count. Your home is not looked upon as a countable asset if you were to apply for Medi-Cal, and in California, there is no equity limit at all. In other states, there are equity limits, and this is one of the advantages that are specific to people that live here in the Golden State.
Other assets that do not count include a motor vehicle that is used for transportation, wedding rings, engagement rings, heirloom jewelry, furniture and other household items, and your personal belongings. Prepaid burial plots are not counted, and you can have as much is $1500 earmarked for final expenses. The same amount of whole life insurance is permissible, and you can have unlimited term life insurance.
What do you do with the assets that you have in your possession that are countable? You can engage in a Medi-Cal “spend down,” which is a divestiture of assets. Essentially, you could give your loved ones their inheritances in advance so that you can qualify for the program to pay for your nursing home care.
This sounds simple enough, but there is a rule in place that complicates the matter. You are not allowed to find out that you must enter a nursing home today, give away assets tomorrow, and qualify for Medi-Cal the next day. There is a 30 month look back period in California. The gift giving must be completed at least 30 months before you submit your application for coverage.
Your eligibility is delayed if you violate this rule. So, if you gave away enough to pay for 18 months of nursing home care within this 30 month interim, your eligibility would be delayed by 18 months. The look back period is two years in other states, and this is yet another big advantage that is afforded to Californians.
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We have shared some basic information about Medi-Cal eligibility in this brief blog post. It is certainly a subject that you should thoroughly understand when you are looking ahead toward the future. If you take the right steps, you can receive quality care if and when you need it without losing a great deal in the process.
Now is the time for action if you would like to discuss nursing home asset protection with a licensed estate planning attorney from our firm. You can send us a message through our contact form to request a consultation appointment, and we can be reached by phone at 310-337-7696.