It is natural to assume that our system is designed to help people address the eventualities that they face when they get older. We have Medicare as a source of health insurance for individuals that are 65 and older, and Social Security provides income for most older Americans.
In reality, there is one gaping hole in the system that you should be aware of when you are looking toward the future.
Long-Term Care
Once you reach the age of 67, your life expectancy is 85 years if you are man, and it is 87 years for a woman. Right now, it may be hard to imagine a time when you will not be able to handle your own activities of daily living. However, things can be very different when you are in your 80s.
This statistical reality is that most elders will need living assistance, and over 30 percent will require a level of care that only a nursing home can provide. Medicare does not pay for this type of care, and the lack of coverage presents a significant challenge.
You can expect to pay over $100,000 a year for nursing home care in Los Angeles, and people sometimes require the care for multiple years. A married couple may be looking at two different rounds of nursing home costs, so the numbers can get pretty large.
Medi-Cal Planning
The Medi-Cal program does pay for long-term care, and even though it is a need-based program, 65 percent of people in California are nursing homes enrollees. If you have resources, you may say that it is unethical to seek Medi-Cal eligibility, and this is a complicated subject.
We are not going to make any judgments, but one could suggest that you are left with no choice since Medicare will not cover a huge expense that so many seniors will incur.
Is it ethical to allow people that have worked all their lives to go broke paying for nursing home care?
Eligibility Parameters
In the end, the choice is yours, but it is possible to qualify for Medi-Cal even if you have resources. First, it is important to understand the fact that some assets don’t count, including your home, and there is no equity limit.
However, there is something to understand about Medi-Cal eligibility and home ownership. If you qualify for Medi-Cal to pay for long-term care, they would seek reimbursement from your estate after your passing. If your home is in your name, they could place a lien on the property.
Things that you cannot sell like your household items and your personal belongings are not counted, and you can maintain ownership of a motor vehicle. Wedding and engagement rings are exempt along with heirloom jewelry.
Applicants can be in possession of prepaid burial plots, unlimited term life insurance, and $1500 of whole life insurance.
Spousal Allowances
When a married person is applying for Medi-Cal to pay for living assistance while their spouse can still live independently, the spouse can keep half of the shared countable assets. The bad news is that there is a limit, and in 2021, it is $130,380.
With the exception of a $35 a month personal needs allowance, income that is due to the institutionalized spouse must go toward the cost of the care. If a healthy spouse is relying on the income, this requirement is set aside.
The healthy spouse would be entitled to a Monthly Maintenance Needs Allowance, and the maximum is $3260 this year.
Medi-Cal Trust
You can convey countable assets into a Medi-Cal trust as part of your nursing home asset protection strategy. This would be an irrevocable trust and you would surrender access to the principal, but you would be able to receive the trust’s earnings until you apply for Medi-Cal.
There is a 30 month look-back period, so you have to fund the trust at least 30 months before you submit your application for Medi-Cal coverage.
Schedule a Consultation Today!
We can help you develop a plan that will allow you to live in comfort as you position your assets with future Medi-Cal eligibility in mind. You can schedule a consultation if you call us at 310-337-7696, and you can use our contact form to send us a message.
Cesar has received his Masters of Science in Integrated Design, Business and Technology from the University of Southern California.
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