People frequently reach their retirement years having never needed to rely on Medicaid to cover their healthcare expenses, only to realize they must now do so to help cover the high cost of long-term care (LTC). Those same people are often operating under some common myths about Medicaid (known as “Medi-Cal” in California) that may discourage them from applying for help. To help prevent you from relying on incorrect information when faced with the need to pay for LTC care, a Los Angeles Medi-Cal planning attorney at Schomer Law Group, APC addresses the top five Medi-Cal myths.
- I won’t need Medicaid because I have Medicare. You will automatically be enrolled in Medicare when you reach retirement age if you, or a spouse, paid into Medicare during your working years. Medicare will cover many of your basic healthcare expenses; however, Medicaid does not cover LTC expenses except under limited circumstances and then only for a short period of time. Consequently, California Medi-Cal may be the only way to pay for LTC unless you can afford to pay out of pocket.
- My spouse will be left with nothing if I rely on Medicaid. There was a time when that was true; however, the Medicaid Spousal Impoverishment Rules now protect a “community spouse.” As of 2021, a community spouse is now entitled to retain up to $130,380 of the couple’s joint assets as well as all of his/her own income and potentially some of the institutionalized spouse’s income if that income is necessary to maintain a basic standard of living. The spousal impoverishment standards are subject tot change each year so check with your estate planning attorney to see how they will impact your situation.
- If I own my house, I will not be eligible for Medi-Cal. Most states, including California, exempt a primary residence (up to an equity limit) from an applicant’s “countable resources” when determining eligibility. If the value of your non-exempt countable resources is above the threshold your application for Medi-Cal will be denied. To qualify, you will have to “spend-down” your excess assets. So, while your home is probably safe, other assets could be at risk. In addition, the Medicaid Estate Recovery Program (MERP) can file a claim against your estate after your death to seek reimbursement for expenses paid on your behalf while you were alive. In some cases, your house could be at risk after you are gone. Note that California is moving toward removing the asset test for Medi-Cal for seniors. Check with your estate planning attorney for updates.
- I can transfer assets if I need to qualify for Medi-Cal. At one time, an applicant could transfer non-exempt assets at the last minute in anticipation of the need to qualify for Medicaid. California Medi-Cal, however, now uses a 30-month “look-back” rule that prevents last-minute asset transfers. Your finances will be reviewed, and any transfers made for less than fair market value during the look-back period could trigger a Medi-Cal waiting period. Again, California is working to remove the asset test for seniors applying for Medi-Cal; however, until that change is effective you still need to avoid violating the look-back period rules.
- Medicaid does not help pay for alternatives to nursing home care. People often think that Medicaid only pays for care at nursing homes. On the contrary, California’s Medi-Cal program has several “waiver” programs that may help cover the cost of in-home supportive services (including paying a family member to provide care), assisted living programs, adult day care, and even home modifications for seniors. All of these waiver programs are aimed at helping seniors to remain in their homes as long as possible.