Most people are fully aware of the fact that Medi-Cal is California’s version of the Medicaid program, which is a need-based health insurance benefit. Because it is intended for people with limited resources, there is a $2000 ceiling on assets.
Why is Medi-Cal relevant to elder law attorneys? The majority of seniors will need living assistance eventually, and three out of every ten will require nursing home care. A year in a Los Angeles nursing home comes with a price tag of over $100,000, and Medicare will not cover it.
The Medi-Cal program will pay for long-term care, and this is why it is important for many seniors that were never financially needy.
Healthy Spouse Allowances
If you are applying for Medi-Cal to pay for long-term care as a married person, and your spouse is still capable of independent living, your spouse would be entitled to two allowances.
There is a Community Spouse Resource Allowance, and the amount of the allowance is equal to half of the couple’s countable assets up to a certain limit. The limit this year is $130,800, and there is no minimum allowance in our state.
Income that is due to the institutionalized spouse must be used to defray the costs that are being incurred aside from a $35 a month personal needs allowance. However, this requirement is set aside if a healthy spouse that is living independently needs the income.
A formula is used to determine the level of financial need, and the maximum Monthly Maintenance Needs Allowance during the current calendar year is $3260.
There are some assets that are not counted for Medi-Cal eligibility purposes, and your home is one of them. In other states, there are equity limits, but there is no equity limit in California at the present time.
One motor vehicle is exempt, and the program does not consider the value of your household items and personal effects. If you have heirloom jewelry, it is exempt along with your wedding and engagement ring.
Prepaid burial plots are permitted, and you can have unlimited term life insurance since it does not have a cash value. An applicant can have up to $1500 of whole life insurance, and you are allotted this amount in cash to help cover your final expenses.
Medicaid Estate Recovery
You can qualify as a homeowner, but in the big picture, this is not a good thing. Medi-Cal has to seek repayment from your estate after you die if you were enrolled in the program while you were living.
Because of the asset limit that governs eligibility, the only really valuable asset that could possibly be left in your estate is your home. As a result, they could potentially place a lien on the property.
Irrevocable Trust and the 30-Month Look Back Period
You could convey your home, additional countable resources, and income-producing assets into an irrevocable, income only trust. As the name would suggest, you can accept distributions of the trust’s income after you fund it, but you would not be able to reach the principal.
Since your income level would not change, you may be able to comfortably fund the trust long before you actually need living assistance. This is an important element, because there is a 30-month look back period.
If you fund an irrevocable trust or otherwise divest yourself of assets today, you would not be eligible for Medi-Cal for another 30 months. We actually get a break as Californians because the look back period is five years in the rest of the country.