When you are planning ahead for your senior years as a person that will qualify for Medicare, you may assume that this program will satisfy your health insurance needs for life.
If you have worked and paid taxes for at least 10 years, you will in fact qualify for Medicare when you reach the age of 65.
It is important to understand the fact that there are out-of-pocket costs even if you have Medicare coverage. You should look into the facts so that you can budget appropriately. This information is available on the Medicare costs at a glance page on their website.
Many people will find the out-of-pocket costs to be manageable, but there is one enormous gap in the coverage. Medicare will not pay for the custodial care that you would receive in a nursing home. These facilities are very expensive, and 35 percent of seniors will someday require nursing home care.
Medi-Cal will pay for long-term care if you can gain eligibility. With this in mind, let’s look at five important facts about the program.
Medi-Cal has a very low asset limit.
Since the program is intended for people with significant financial need, there is an asset limit that is quite low. In California, it is just $2000 at the time of this writing in 2020.
Some things don’t count.
The above sounds like some pretty bad news, but the good news is that there are assets that you probably have in your possession that are not counted. Your home is one of them, but there is an equity limit in other states. California is an exception for the time being, but this is supposed to change in the future.
Aside from the home, one motor vehicle that is used as a primary form of transportation is not countable. You can have unlimited term life insurance, which is coverage with no cash value, and up to $1500 of whole life insurance. The same amount can be set aside for final expenses, and prepaid burial plots are exempt.
You can maintain ownership of your wedding ring, your engagement ring, and any heirloom jewelry that you may have in your possession. Household items and personal belongings are not countable assets for Medi-Cal eligibility purposes.
The healthy spouse has certain property rights.
When a married person is applying for Medi-Cal to pay for long-term care, a healthy spouse that can still live independently is entitled to certain allowances. One of them is the Community Spouse Resource Allowance.
This gives the healthy spouse the ability to keep half of the shared assets that are countable, but there is a limit. In California in 2020, this limit stands at $128,640.
Almost all of the income that is brought in by a Medi-Cal recipient must go toward the cost of the care that is being received, but there is a concession made for a healthy spouse.
If the community spouse needs the money to maintain a minimal standard of living, they can receive a Monthly Maintenance Needs Allowance. This lets the healthy keep the income that is earmarked for the spouse that is receiving long-term care up to a limit of $3216 a month.
There is a 30 month look-back period.
A logical course of action would be to give gifts to loved ones to get assets out of your name to qualify for Medi-Cal. This is called a “spend down,” and it is a step that is commonly taken.
However, it takes careful, informed planning to gain eligibility at the right time. In our state, there is a 30 month look back period. You have to complete all gift giving at least 30 months before you apply for coverage.
If you fail to comply with this rule, your eligibility is delayed. The length of the penalty would depend on the amount that you gave away. For example, if you gave away enough to pay for 12 months in a nursing home, you would be ineligible for 12 months.
We are here to help!
The final key Medi-Cal fact that we would like to underscore is the value of effective legal counsel. An elder law attorney from our firm can gain an understanding of your financial situation and help you take the appropriate steps to aim toward Medi-Cal eligibility.
Remote consultations are available during these unusual times that we are all experiencing. You can set the wheels in motion right now if you send us a message through our contact page, and we can be reached by phone at 310-337-7696.