Medi-Cal is one of two government-operated health insurance programs in America. Medicare is the other. In California, this program is called Medi-Cal. While most seniors know they can get Medicare benefits and understand what it takes to qualify, there is more confusion and uncertainty when it comes to Medi-Cal.
Medi-Cal is means-tested and is a program intended for the needy. It provides payment for medical coverage for people with low or no incomes and with few assets. Medi-Cal, however, also does much more. It can pay for nursing home care or home health services which seniors need.
Medicare and private insurers often pay little or no benefits for nursing home care services, except in limited circumstances and for brief periods, such as when someone needs rehabilitation after a hospital discharge. Medi-Cal, on the other hand, can pick up all of the multi-thousand dollar tab for nursing home expenses for as long as a senior needs.
While Medi-Cal can be a financial lifesaver when you or a loved one needs nursing home care, the problem is a lot of seniors have saved money or have paid off properties. The assets seniors own could be disqualifying until they are spent on nursing care. Fortunately, Medi-Cal planning provides a way around this rule to allow seniors to keep their legacy. Schomer Law Group can provide invaluable assistance and advice on Medi-Cal planning. We’ll custom-tailor a plan for you and we’ll also answer questions including:
- Why is Medi-Cal planning important?
- When should I start with Medi-Cal planning and how does it work?
- How can a Los Angeles Medi-Cal planning lawyer help me?
Why is Medi-Cal Planning Important?
Nursing homes can cost thousands of dollars a month, even for a semi-private room. The California Department of Health Care Services indicates the average cost for a nursing home in 2011 was $91,250 annually. With expenditures at almost $100,000 (or more), seniors who have to pay privately for a nursing home could find all of their retirement savings gone in the blink of an eye. Property could also have to be sold to generate money to pay for nursing home costs once a senior’s cash reserves run out.
Medi-Cal planning aims to help seniors avoid this requirement to pay for a nursing home out-of-pocket. Instead, the goal is to strategically transfer money and property into a legal trust. The trust will become the official legal owner of the property, although the senior can still benefit from its use and possession. These transfers need to be done at least five years prior to applying for Medi-Cal coverage, because Medi-Cal has a five-year look back period.
Under the five-year lookback rule, any transactions in which items were given away or sold for less than their value within five years of trying to get Medi-Cal nursing home coverage could result in a delay in eligibility for benefits. The value of transferred assets divided by the average annual monthly cost of a nursing home determines how many months a senior will have to wait to become eligible for Medi-Cal-paid nursing care.
With 44.1 percent of people ending up in a nursing home at some point, planning ahead for this possible future is key to making sure money is available when you need it and to ensuring that spending down assets and squandering a legacy is not necessary.
When Should I Start with Medi-Cal Planning and How Does it Work?
Medi-Cal planning typically involves creating a trust, which is then funded with property and assets you wish to protect. You must ensure that the right type of trust is chosen and that all formalities are followed in terms of transferring property into the trust. A Los Angeles Medi-Cal planning attorney will help with the process of creating the trust and taking care of all the necessary steps for moving money and property into it.
There may also be other approaches to Medi-Cal planning and some additional steps which you can take. For example, strategic gifts, spending on certain types of home improvements, and taking advantage of protections for spouses are all important ways to try to avoid losing money and property.
Whatever specific course of action you choose, you should start Medi-Cal planning when you have assets to protect but are still too young to need nursing home care. Creating a plan when you are younger gives you time to make transfers early so you don’t end up becoming temporarily disqualified for benefits due to the five-year look back period.