Medi-Cal may not be on your radar if you have health insurance through Medicare or your employer. This makes sense on the surface, but at some point, it may become quite relevant to you.
Long-Term Care Costs
Most senior citizens will need help with their activities of daily living, and long-term care is very expensive. It is not easy to get out a checkbook and pay over $100,000 for a year in a nursing home when you have been retired for a couple of decades.
And of course, a married couple may face two different sets of nursing home bills. Medicare does not pay for the custodial care that nursing facilities provide, so this is not the solution.
Fortunately, there is some recourse, because Medi-Cal will cover long-term care. This is why you should understand the program parameters, because Medi-Cal eligibility can preserve your legacy.
You cannot qualify for Medi-Cal if you have more than $2000 in countable assets in your name. The good news is the fact that your home is not counted, and there is no equity limit in California. This is a break, because other states have Medicaid equity limits.
On the bad news side of the coin, there is a Medi-Cal estate recovery phase. If you are a Medi-Cal beneficiary and your home is in your direct personal possession at the time of your passing, the program could put a lien on the property.
Healthy Spouse Allowances
Now that we have provided the necessary background information, we can focus on the question that serves as the title of this post. If you are applying for Medi-Cal as a married person, and your spouse can still live independently, your spouse is entitled to two allowances.
Under other circumstances, your income would go toward the cost of the care that is being received, but there is an exception for married people.
The healthy spouse can receive the income in the form of a Monthly Maintenance Needs Allowance. In 2021, the maximum Monthly Maintenance Needs Allowance is $3260. This figure is updated annually to account for inflation, so it will be a bit higher next year.
An independent spouse is also entitled to a Community Spouse Resource Allowance. This is half of the assets that are countable up to a certain limit. At the present time, the limit is $130,380.
You can position your assets wisely with future Medi-Cal eligibility in mind, and we can help you implement a strategy. It will typically revolve around the utilization of an income only, irrevocable trust.
The trust would be funded with income-producing assets if you are in possession of them, and you can protect your home from Medi-Cal recovery by conveying it into the trust.
You would designate a trustee to act as the administrator, and you would not have direct access to the principal. However, you could receive distributions of income that is generated by the assets that you convey into the trust until you apply for Medi-Cal.
California has a 30 month look-back period, which is far superior to the five-year period that is in place in other states. The funding must take place at least 30 months before you apply for Medi-Cal coverage, so a modicum of advance planning is necessary.
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We have produced a very useful worksheet that you can go through to gain a more thorough understanding of this important process. It is being offered free of charge, so you should definitely take advantage of this opportunity to build on your knowledge.
You can get your copy if you visit our worksheet access page and follow the simple instructions.
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Each situation is different, and there are diverse approaches that can be taken. When you choose our firm, we will make personalized recommendations so you can go forward with a custom crafted plan that is ideal for you and your family.
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