The likelihood of needing long-term care and the high cost of that care make Medicaid planning an integral part of the average estate plan. Understanding the need for Medicaid (known as “Medi-Cal” in California) planning, however, is only the beginning of formulating a successful Medicaid planning component. You also need to understand the often-confusing eligibility guidelines as well as how the Medicaid Estate Recovery Program could impact your estate after your death. To help get you started, a Los Angeles Medicaid planning attorney at Schomer Law Group, APC explains the Medicaid Estate Recovery Program.
Qualifying for Medi-Cal
At some point during your retirement years, either you or your spouse may need long-term care (LTC). At a nationwide average cost of over $100,000 a year and an average length of stay of about three years, your LTC bill will likely be more than you can easily afford to pay out of pocket. Since neither Medicare nor most basic health insurance policies will pay for LTC, Medicaid may be the only option for help covering LTC expenses.
Eligibility for Medicaid, however, depends on your income and assets. To qualify, the value of your “countable resources” must fall below the program’s limit which is as low as $2,000 for an individual. If your resources exceed the limit when you apply, your application will be denied, and you may be required to “spend-down” your resources before being eligible for benefits. Understandably, the need to reduce countable resources to avoid the need to “spend-down” assets is what most people focus on when they are working on a Medicaid plan. While it is crucial to plan ahead to ensure that you are eligible for Medicaid if you need it during your lifetime, it is also important to think about how Medicaid could impact your estate after you are gone. Unfortunately, your assets remain at risk even after you qualify for Medicaid because of the Medicaid Estate Recovery Program (MERP).
What Is the Medicaid Estate Recovery Program?
The purpose of MERP is to allow the individual states to try and recover some of the funds they spend on Medicaid recipients after the recipient’s death. The MERP rules allow the state to file a claim against the recipient’s estate, for the amount spent on the recipient, during the probate of the estate. In California, MERP affects Medi-Cal members who are 55 and older, or those of any age who are cared for at an institution, such as a nursing home. For Medi-Cal members who die on or after January 1, 2017:
- Repayment will be limited only to estate assets subject to probate that were owned by the deceased member at the time of death.
- Repayment will be limited to payments made, including managed care premiums paid, for nursing facility services, home and community-based services, and related hospital and prescription drug services received when the member was an inpatient in a nursing facility or received home and community-based services.
Are There Any Exemptions to MERP?
There are certain circumstances under which Medi-Cal will not seek reimbursement from your estate after your death, including:
- While your spouse/registered domestic partner is living
- If you are survived by a child who was younger than 21 at the time of your death
- If you are survived by a child of any age who is blind or disabled (as defined by the federal Social Security Act) as of the date of the Estate Recovery claim
- If pursuing the claim would create an substantial hardship. Requests for a hardship exemptions must be filed within 60 days of the date the MERP claim letter is received.
Contact a Los Angeles Medicaid Planning Attorney
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about Medi-Cal, contact an experienced Los Angeles Medicaid planning attorney at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.