Before we get to the specific subject of this blog post, we should explain why Medi-Cal may be relevant to you when you are a senior citizen. If you have worked and paid taxes for at least 10 years, or if your spouse has done this, you will qualify for Medicare when you reach the age of 65. This program will provide a health care insurance underpinning, but there are out-of-pocket expenses, and there is one huge gap.
Medicare will pay for convalescent care after an injury or illness when recovery is anticipated. However, it will not pay for long-term custodial care. This is the type of assistance that you would receive in a nursing home or some other type of assisted living facility.
Nursing homes are extremely expensive at well over $100,000 a year for a private room in our area. Costs have been rising annually, so it likely that you will see some much bigger numbers if you need this type of care a couple of decades from now.
Of course, some people are in nursing homes for more than a year, and in other cases, they enter nursing homes after residing in pricey assisted living communities. And remember, you can double the anticipated expenses if you are married.
The Medi-Cal Solution
Medi-Cal is a jointly administered federal/state government health insurance program that will pay for a stay in a nursing home if you can gain eligibility. You are probably aware of the fact that this is a need-based program, so you cannot qualify if you have a reasonable store of assets in your own name.
The limit on assets is just $2000, but there are some things that do not count when Medi-Cal is determining your eligibility status. If you have a prepaid burial plot, it is not considered to be a countable asset, and you can have as much as $1500 set aside for final expenses. Unlimited term life insurance is allowed, and you can have up to $1500 worth of whole life insurance and still qualify for Medi-Cal to pay for long-term care.
A Medi-Cal applicant can maintain ownership of one vehicle that is used as a primary source of transportation. If you apply for eligibility, you can maintain ownership of your furniture and the things that you have around the house, along with your personal possessions. Wedding rings, engagement rings, and heirloom jewelry are not considered to be countable assets.
Now that we have set the stage, we can hone in on the core purpose of this post. Your home is not considered to be a countable asset for Medi-Cal eligibility purposes, and there is no equity limit. This is a major advantage, because there are equity limits in other states.
If you qualify for Medi-Cal to pay for nursing home care, after you pass away, the program is required by law to seek reimbursement from the assets that may remain in your estate. Your home could be attached if it was in your direct personal possession and your spouse was not residing in it.
As a proactive protective measure, you could give the home to a loved one or convey it into a trust. A caveat would be that you would have to relinquish ownership at least 30 months before you apply for Medi-Cal.
One way to get around this look back period is through the Caregiver Child Exemption. You can give your home to a child that has been your primary caregiver in the home for at least two years, and this 30 month rule would not be applicable.
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