Six Myths About Medi-Cal
My job is to help my clients plan their estates properly in order to legally and ethically maximize the amount of benefits you receive from Medi-Cal, while preserving the maximum amount of assets and resources. My goal is for my clients to live with dignity and self-respect, with minimum government interference.
MEDI-CAL MYTH #1: YOUR LOVED ONES MUST SPEND THEIR RESOURCES DOWN TO $2,000.
This is perhaps the most destructive and pervasive myth I hear, and I hear it all the time.
TRUTH: When applying for Medi-Cal, your loved one can have no more than $2,000 of “countable” resources in their name. An asset is not “countable” if it is “exempt” or “unavailable.” There are many assets, your home, for example, that are exempt if we plan properly, and implement your plan.
An “unavailable” asset is one that is not exempt, but for one reason or another, cannot be liquidated or readily accessed at the time of the application. An example might a time-share that would be difficult to sell. If married, the at-home spouse will be able to keep at least an additional $120,900 above and beyond any exempt or unavailable property as a Community Spouse Resource Allowance (CSRA). In many cases the CSRA can be raised further, sometimes substantially further. I can advise you whether or not you would qualify and explain how this is done.
MEDI-CAL MYTH #2: THERE IS A PENALTY FOR SHELTERING YOUR ASSETS BY CHANGING COUNTABLE, NON-EXEMPT ASSETS INTO EXEMPT ASSETS.
TRUTH: There is no such Medi-Cal penalty. If done properly, this can be an excellent strategy for qualifying for Medi-Cal without impoverishing yourself or a family member. There is also no “look back” period for such transactions.
MEDI-CAL MYTH #3: THE AT-HOME SPOUSE OF A NURSING HOME RESIDENT RECEIVING LONG TERM CARE MEDI-CAL CAN KEEP ONLY $120,900 OF ADDITIONAL ASSETS.
TRUTH: The at-home spouse is allowed to keep any exempt or unavailable property. Exempt property includes: the home, certain pension and retirement accounts, personal property, a motor vehicle, business property, and many other forms of assets. An “unavailable” asset is one that is not exempt, but for one reason or another, would be difficult to liquidate or access at the time of the application.
Along with all exempt and unavailable property, the at-home spouse may keep an additional “Community Spouse Resource Allowance” (CSRA). In 2018, this Community Spouse Resource Allowance is $120,900. It is possible, however, to have the CSRA allowance raised substantially above the basic $120,900 allowance. This is one of the most powerful and least understood Medi-Cal planning tools.
If the non-investment income (Social Security plus pensions) in the at-home spouse’s name is less than $3,023, by law the at-home spouse is eligible for this special relief. In the typical hearing we seek for this allowance, the ill spouse's income is not counted; the question is only whether or not the at-home spouse's Social Security and Pension income is less than $3,023 per month.
The amount one is entitled to raise their CSRA above the $120,900 is based on a fairly precise and predicable formula. In the majority of cases I see, the at-home spouse will be able to shelter all of their remaining assets. Most families find this an immense relief. We would be pleased to work with you and calculate how much we could raise your Community Spouse Resource Allowance. Only an Elder Law Attorney can represent you in such a petition before the Court, so you are not likely to hear about this from other non-attorney Medi-Cal planners.
MEDI-CAL MYTH #4: THERE IS A 30 (OR 60) MONTH INELIGIBILITY PENALTY FOR ANY TRANSFERS OR GIFTS.
TRUTH: A “gift” is a transfer of any asset for less than fair value in return. If an applicant or their spouse has made a gift within the previous 30 months, there may be a penalty. The penalty may be a period of ineligibility for Long Term Care Medi-Cal.
The penalty is calculated on several variables, including the size of the specific gift. The penalty can be as short as a month, or as long as 30 months. Not all gifts, however, are penalized. An applicant can give away assets and still be eligible for Medi-Cal depending on the property that was transferred, the amount of the transfer, when the transfer was made, and when and if the person who made the transfer applies for Long Term Care Medi-Cal.
Even a gift that is penalized can be an intelligent and valuable planning tool, if done with awareness of all relevant rules and regulations. If done properly, gifting can allow a family to retain a substantial portion of their assets for their heirs while still qualifying the applicant for Long-Term Care Medi-Cal. The 30-month period that you may hear about is the “look-back” period. The State will “look-back” for 30 months, and ask the applicant to disclose any transfers made within that period. It has nothing to do with the calculation of any penalty.
There are many pitfalls for the unwary in attempting to qualify by gifting one’s property. While there is a time and a place for gifts, do not attempt to qualify by giving away your assets without consulting with a qualified elder law attorney.
Gifting without full knowledge of the relevant Medi-Cal, tax, and other federal and state laws and regulations can result in substantial liabilities and penalties, including large tax liabilities and benefits ineligibility, often costing the family much more than would have otherwise been spent.
I will develop a Medi-Cal qualification plan for your family, which may have a properly designed gifting component.
MEDI-CAL MYTH #5: AFTER THE DEATH OF THE MEDI-CAL BENEFICIARY, THE STATE OF CALIFORNIA WILL TAKE THE FAMILY HOME OR ANY OTHER AVAILABLE FAMILY ASSETS TO PAY FOR THE MEDI-CAL BENEFITS RECEIVED.
TRUTH: The state can demand to be reimbursed for all benefits paid after the Medi-Cal beneficiary’s death. This could include forcing the sale of the family home to pay off the claim. However, there are several significant exceptions and methods to avoid this.
Most importantly, the State will delay, but only delay, any recovery during the life of a surviving spouse. There are other circumstances in which the State cannot recover, or in which a “hardship waiver” can be requested. Most importantly, however, the State can recover only against property that is in the estate of the Medi-Cal recipient at that time of their death.
There are planning tools that can assure that there is little or no property that will be considered to be in the Medi-Cal recipient’s estate, therefore, no recovery.
Again, there are some technical pitfalls and significant adverse tax impacts if this is not done correctly, so please consult an Elder Law Attorney experienced in Medi-Cal planning before attempting recovery-avoidance planning. Much may be at stake in not doing this right. I would be pleased to help you develop your recovery-avoidance plan, and draft any required documents.
MEDI-CAL MYTH #6: ALL THE INCOME OF THE SPOUSE IN THE NURSING HOME AND THE INCOME OF THE AT-HOME SPOUSE WILL BE APPLIED AS A “SHARE OF COST” PAYMENT TO THE NURSING HOME.
TRUTH: "Share of Cost" is something like a "co-pay." It is the portion of the monthly nursing home cost you must pay before Medi-Cal pays the balance. None of the income in the name of the at-home spouse is used in calculating the share of cost.
It doesn’t matter what the at home spouse’s income is, share of cost is calculated only by reference to the institutionalized spouse’s income. There is one exception to this: if the at-home spouse’s income is less than $3,023, any income of the Medi-Cal recipient can be given to their at-home spouse until the at-home spouse is receiving no less than $3,023 per month. This reduces the income of the ill spouse payable as share of cost.
This rule helps many married applicants reduce their share of cost to zero. If the Medi-Cal recipient is unmarried, or if a married recipient still has income after the allowed assignment to their spouse, there are additional offsets that are allowed for those who are aware of and request them. As an example, in many cases, your share of cost can also be redirected to pay for needed therapy for your family member. We would be happy to help you and your family minimize the share of cost payable towards Long Term Care Medi-Cal, or redirect it for beneficial therapy.