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This topic relates to Medi-Cal planning for California
CAVEAT: Like most areas of the law, a little knowledge can be dangerous. This is particularly true of Medi-Cal planning. The information provided here is NOT legal advice. Medi-Cal law is complicated and ever-changing and you are strongly advised to seek legal counsel before taking any action to utilize Medi-Cal planning strategies to qualify for long term care benefits.
Note: The Federal Deficit Reduction Act (DRA) has been passed into law but not yet implemented inCalifornia California
Having said that, let's take a quick peak at the general topic.
Essentially, there are four main issues in Medi-Cal Planning:
Eligibility
Most people believe that a person must be poor to be eligible to receive benefits. Not so. In 2007, a married couple can own, among other things, a home and have up to $101,640 cash, in the bank, and still qualify. The $101,640 amount is called the Community Spouse Resource Allowance (CSRA).
In addition, the "well-spouse" can keep a minimum income of $2,541 per month. This is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). Remember: this is the minimum. There is currently no limit on the income of the well-spouse.
Certain other assets can be owned as well, and the ill-spouse may still qualify.
For a single person, the eligibility rules are more restrictive. A single person can still own a home but, since they are not married, cannot take advantage of the CSRA. A single person can own a home, a car, and other "exempt" property, no more than $2,000 in "non-exempt" assets. However, there are still many planning strategies to qualify a single person, even if they own substantial assets.
The issue is: Even though a spouse qualifies for Medi-Cal, will the couple still have to pay some money out of their own pocket to the nursing home? This is called the share of cost.
Example # 1. Let's say wife enters a nursing home inRiverside County
Therefore, wife will have to pay $465 per month to the nursing home, as her share of cost, and Medi-Cal will pay the balance.
Example # 2. Wife enters a nursing home and has a monthly social security income of $1,500 and a monthly pension of $500.00 ($3,500 total).
Husband ("well-spouse") has a monthly income of $500 social security. Remember, he is allowed to have $2,541 in monthly income (MMMNA). He is short $2,041 per month ($2,541 - $500 = $2,041).
What should be done? The law allows husband to receive enough of wife's income to meet his MMMNA. Therefore, $2,041 of wife's monthly income can be allocated to husband. Wife is left with $1,424 per month ($3,500 - $35 (PNA) - $2,041 = $1,424) and this amount must be paid to the nursing home. Medi-Cal will pay the rest.
CAVEAT: Like most areas of the law, a little knowledge can be dangerous. This is particularly true of Medi-Cal planning. The information provided here is NOT legal advice. Medi-Cal law is complicated and ever-changing and you are strongly advised to seek legal counsel before taking any action to utilize Medi-Cal planning strategies to qualify for long term care benefits.
Note: The Federal Deficit Reduction Act (DRA) has been passed into law but not yet implemented in
Having said that, let's take a quick peak at the general topic.
Essentially, there are four main issues in Medi-Cal Planning:
Eligibility
Most people believe that a person must be poor to be eligible to receive benefits. Not so. In 2007, a married couple can own, among other things, a home and have up to $101,640 cash, in the bank, and still qualify. The $101,640 amount is called the Community Spouse Resource Allowance (CSRA).
In addition, the "well-spouse" can keep a minimum income of $2,541 per month. This is called the Minimum Monthly Maintenance Needs Allowance (MMMNA). Remember: this is the minimum. There is currently no limit on the income of the well-spouse.
Certain other assets can be owned as well, and the ill-spouse may still qualify.
For a single person, the eligibility rules are more restrictive. A single person can still own a home but, since they are not married, cannot take advantage of the CSRA. A single person can own a home, a car, and other "exempt" property, no more than $2,000 in "non-exempt" assets. However, there are still many planning strategies to qualify a single person, even if they own substantial assets.
The issue is: Even though a spouse qualifies for Medi-Cal, will the couple still have to pay some money out of their own pocket to the nursing home? This is called the share of cost.
Example # 1. Let's say wife enters a nursing home in
Therefore, wife will have to pay $465 per month to the nursing home, as her share of cost, and Medi-Cal will pay the balance.
Example # 2. Wife enters a nursing home and has a monthly social security income of $1,500 and a monthly pension of $500.00 ($3,500 total).
Husband ("well-spouse") has a monthly income of $500 social security. Remember, he is allowed to have $2,541 in monthly income (MMMNA). He is short $2,041 per month ($2,541 - $500 = $2,041).
What should be done? The law allows husband to receive enough of wife's income to meet his MMMNA. Therefore, $2,041 of wife's monthly income can be allocated to husband. Wife is left with $1,424 per month ($3,500 - $35 (PNA) - $2,041 = $1,424) and this amount must be paid to the nursing home. Medi-Cal will pay the rest.
Recovery
This issue concerns Medi-Cal's ability to recover the money they paid out on behalf of the Medi-Cal beneficiary when that person passes away. Medi-Cal is becoming increasingly aggressive in its recovery efforts. The Medi-Cal planing strategy should include steps to prevent Medi-Cal from making a recovery claim, or at least minimize such a recovery.
Medi-Cal can only recover from a decedent's "estate". However, Medi-Cal is continually trying to broaden its definition of what constitutes an estate.
For example, most married couples own title to their home as "joint tenants". Joint tenancy carries with it, what is called, the "right of survivorship". This means that when one of them dies, then their interest in the home automatically passes to the survivor. However, Medi-Cal includes "joint tenancies" as part of the decedent's (beneficiary's) "estate" and will attempt to make a recovery claim against the house. Medi-Cal won't do this so long as the surviving joint tenant is still alive and living in the home. However, when the surviving joint tenant dies, then Medi-Cal will make a claim against the deceased beneficiary's one-half interest in the home, up to the amount of money that Medi-Cal paid to the nursing home.
The couple thought that when they both were deceased, that their home would go to their children. However, Medi-Cal will sent their kids a rather strongly worded letter stating that they have 60 days to pay the entire Medi-Cal recovery amount, or else a lien may be placed against the property. If the house is then sold, Medi-Cal will be paid the amount it is owed, and if there is any money left over, it will go to the kids.
Can this recovery claim be avoided?
Yes. While the Medi-Cal beneficiary is still alive, his or her title to the home must betransferred out of their name. When they eventually pass away, they do not own an interest in the home and therefore it is not part of their "estate".
Note: There is no "one size fits all" when it comes to the proper method to transfer title of a home. Transferring title to children, for example, may trigger adverse tax consequences and all alternatives must be explored in determining which way to proceed.
Elder Financial Abuse
As discussed, most assets must be transferred out of the name of the Medi-Cal beneficiary in order to avoid a recovery claim. To someone not familiar with Medi-Cal planning, such transfers might appear to constitute elder financial abuse, which you certainly do not want to do nor even be accused of doing. Family members must all be informed of the Medi-Cal laws and the purpose of implementing the Medi-Cal plan. Sometimes, it is appropriate to petition the court to obtain permission to transfer assets when there is a legitimate Medi-Cal planing purpose. Most judges are not familiar with Medi-Cals laws and regulations and often need to be fully briefed on the "hows and whys" of Medi-Cal planning.
Summary
There are many different strategies available, for both married couples and single persons, to qualify to receive Medi-Cal benefits to pay for the high cost of long term care in a skilled nursing facility. When it comes to long term care, Medi-Cal is not only for the poor.
This issue concerns Medi-Cal's ability to recover the money they paid out on behalf of the Medi-Cal beneficiary when that person passes away. Medi-Cal is becoming increasingly aggressive in its recovery efforts. The Medi-Cal planing strategy should include steps to prevent Medi-Cal from making a recovery claim, or at least minimize such a recovery.
Medi-Cal can only recover from a decedent's "estate". However, Medi-Cal is continually trying to broaden its definition of what constitutes an estate.
For example, most married couples own title to their home as "joint tenants". Joint tenancy carries with it, what is called, the "right of survivorship". This means that when one of them dies, then their interest in the home automatically passes to the survivor. However, Medi-Cal includes "joint tenancies" as part of the decedent's (beneficiary's) "estate" and will attempt to make a recovery claim against the house. Medi-Cal won't do this so long as the surviving joint tenant is still alive and living in the home. However, when the surviving joint tenant dies, then Medi-Cal will make a claim against the deceased beneficiary's one-half interest in the home, up to the amount of money that Medi-Cal paid to the nursing home.
The couple thought that when they both were deceased, that their home would go to their children. However, Medi-Cal will sent their kids a rather strongly worded letter stating that they have 60 days to pay the entire Medi-Cal recovery amount, or else a lien may be placed against the property. If the house is then sold, Medi-Cal will be paid the amount it is owed, and if there is any money left over, it will go to the kids.
Can this recovery claim be avoided?
Yes. While the Medi-Cal beneficiary is still alive, his or her title to the home must betransferred out of their name. When they eventually pass away, they do not own an interest in the home and therefore it is not part of their "estate".
Note: There is no "one size fits all" when it comes to the proper method to transfer title of a home. Transferring title to children, for example, may trigger adverse tax consequences and all alternatives must be explored in determining which way to proceed.
Elder Financial Abuse
As discussed, most assets must be transferred out of the name of the Medi-Cal beneficiary in order to avoid a recovery claim. To someone not familiar with Medi-Cal planning, such transfers might appear to constitute elder financial abuse, which you certainly do not want to do nor even be accused of doing. Family members must all be informed of the Medi-Cal laws and the purpose of implementing the Medi-Cal plan. Sometimes, it is appropriate to petition the court to obtain permission to transfer assets when there is a legitimate Medi-Cal planing purpose. Most judges are not familiar with Medi-Cals laws and regulations and often need to be fully briefed on the "hows and whys" of Medi-Cal planning.
Summary
There are many different strategies available, for both married couples and single persons, to qualify to receive Medi-Cal benefits to pay for the high cost of long term care in a skilled nursing facility. When it comes to long term care, Medi-Cal is not only for the poor.