The Medi-Cal program may not be on your radar if you have health insurance and you know you will qualify for Medicare when you are 65. This is understandable on the surface, but there is a good reason why you should keep Medi-Cal in mind.
Long-Term Care Costs
Why is Medi-Cal relevant? The program will pay for a stay in a nursing home, and Medicare does not cover the custodial care that nursing facilities provide.
You can expect to pay over $100,000 per year for a private room in a Los Angeles area nursing home, and a year is the average length of stay.
However, 13 percent of people that require paid care receive the assistance for five years or more according to the United States Department of Health and Human Services.
A married couple may be inundated with two different sets of nursing home bills, so the expenses can be considerable, and costs are likely to rise over the next couple of decades.
Medi-Cal Asset Limit
Now that we have explained why you should care about Medi-Cal, we can get to the point of this post. Since Medi-Cal is a need-based program, there is a low $2000 asset limit.
The $2000 figure can sound like a dealbreaker, but there is a path that will lead to eligibility. First, you have to be aware of the fact that some assets that you have in your possession are not countable for Medi-Cal eligibility purposes.
Your home is one of them, and there is no equity limit in California. The lack of an equity limit is unique to California; there are equity limits in other states.
Wedding rings, engagement rings, and heirloom jewelry are not counted, and one motor vehicle that is used as a primary source of transportation is exempt. Medi-Cal does not count your personal belongings or the items that you have around your home.
The program wants you to be able to cover your final expenses, so prepaid burial plots are exempt along with $1500 set aside for final expenses. You can carry that much whole life insurance, and unlimited term life is permitted because it has no cash value.
Medi-Cal Estate Recovery
While you can qualify if you are a homeowner, you have to be aware of the Medi-Cal estate recovery mandate. The program is required to seek reimbursement from the estates of Medi-Cal beneficiaries after their passing.
If you are in direct personal possession of a home at the time of your death, they could place a lien on the property.
Healthy Spouse Allowances
When a healthy spouse can remain at home while their spouse is residing in a nursing facility, the independent spouse is entitled to a Community Spouse Resource allowance. This is half of the countable assets up to a limit that stands at $130,380 this year.
Income that is earmarked for a Medi-Cal beneficiary must go toward the cost of the care that is being received, but an exception is made when a healthy spouse needs the income. They can receive a Monthly Maintenance Needs Allowance, and the maximum is $3260.
Spending Down and the 30-Month Look Back Period
You can divest yourself of assets that are countable to qualify for Medi-Cal. If you were to fund an irrevocable Medi-Cal trust, you could receive distributions of the earnings, and the principal would not count if you apply for Medi-Cal.
However, you have to act in advance, because there is a 30-month look back period. All large asset transfers must be completed within 30 months of your application submission date.
We Are Here to Help!
If you take the right steps in advance, you can live comfortably during your golden years with the knowledge that you will qualify for Medi-Cal if it ever becomes necessary. When the time comes, your legacy will be passed along to your loved ones in the optimal manner.
It all starts with a consultation at our Los Angeles Medi-Cal planning office, and you can set up an appointment if you call us at 310-337-7696. There is also a contact form on this site you can fill out if you would rather send us a message.