At some point during your retirement years, there is a very good chance that you, or your spouse, will turn the California’s Medi-Cal program for help covering the high cost of long-term care. Qualifying for Medi-Cal can be challenging if you failed to plan ahead; however, be careful who you turn to for help with Medi-Cal planning. Proper Medi-Cal planning should protect your assets, maximize your income, and ensure your eligibility for Medi-Cal when you need it down the road.
Why Is Medi-Cal Planning Necessary?
The high cost of long-term care (LTC) prompts over half of all seniors needing that care to turn to the Medicaid program for help. While Medi-Cal does cover LTC, you must first qualify for benefits. Medi-Cal imposes both income and asset limits that cannot be exceeded by applicants. Although some common assets, such as your home, will likely be exempt, there is a good chance that your assets will exceed the very low asset limit unless you plan ahead. The need to reduce the value of estate assets is frequently what prompts the need for Medi-Cal planning.
Who Is Your Medi-Cal Planner?
Many people who advertise themselves as “Medi-Cal Planners” are insurance agents or financial advisors. The problem with an insurance agent or financial advisor helping you with Medi-Cal planning is that more often than not their primary motive is to sell you a “Medi-Cal Exempt Annuity.” While a properly drafted annuity can remove countable resources from your estate and protect them from loss, an annuity also comes with a high commission to the salesperson and offers little in the way of additional advantages over other Medi-Cal planning options. An annuity, for example, offers low liquidity and usually imposes a substantial penalty should you need the assets held in the annuity. Moreover, the income stream produced by the annuity is typically turned directly over to the nursing home to cover your “share of cost” and the annuity assets may be subject to a claim made against your estate by Medi-Cal after your death as part of the Medicaid Estate Recovery Program.
Medi-Cal Planning Options
Medi-Cal planning, when done properly, can protect your hard-earned assets and set you up to qualify for Medi-Cal in the future should you need to do so. Where an insurance agent or financial planner has their eye on the commission potential of an annuity sale, an experienced Medi-Cal planning attorney will be focused on helping you to create a successful Medi-Cal plan that ensures your future eligibility while safeguarding assets in the meantime.