Medi-Cal Planning

Most people believe that a person must be poor to be eligible to receive Medi-Cal benefits to pay the costs of long term care in a skilled nursing facility. Not so.

This topic relates to Medi-Cal planning for California residents.   This means obtaining eligibility to have Medi-Cal pay for the nursing home costs and to protect assets and avoid Medi-Cal’s ability to recover the monies it paid out on behalf of the Medi-Cal beneficiary.

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.  Having said that, let’s take a quick peak at the general topic.

Essentially, there are four main issues in Medi-Cal Planning.


In 2009, a married couple can own, among other things, a home and have up to $109,560 cash, in the bank, and still qualify.  The $109,560 amount is called the Community Spouse Resource Allowance (CSRA).

In addition, the “well-spouse” can keep a minimum income of $2,739 per month (2009).  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, but 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.

Share of Cost

The issue is:  Even though a spouse qualifies for Medi-Cal, will the couple still have to pay any money out of their own pocket each month to the nursing home, with Medi-Cal paying the rest?

Example # 1.  Wife (nursing home patient) has a monthly social security income of $500.  Husband (the “well-spouse”) has a social security income of $1,500 and a pension of $2,000 ($3,500 total).  As the “well spouse”, husband may keep, as his own income, a minimum of $2,739 per month (MMMNA).  His social security and pension total $3,500 per month, so he is unable to use some of wife’s monthly income to meet his MMMNA (his income already exceeds it).  Wife is entitled to a “personal needs allowance” (PNA) of $35 per month. 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 ($500 – $35 = $465).

Example # 2.   Husband enters a nursing home and has a monthly social security income of $1,500 and a monthly pension of $1,000.00 ($2,500 total).  Wife (“well-spouse”) has a monthly income of $500 social security.  Remember, she is allowed to have $2,739 in monthly income (MMMNA).  She is short $2,239 per month ($2,739 – $500 = $2,239).

What can be done? 

Remember:  The law allows wife to receive enough of husband’s income to meet her MMMNA.  Therefore, $2,239 of husband’s monthly income can be allocated to wife.  Husband is left with $226 per month ($2,500 – $35 (PNA) – $2,239 = $226) and this amount ($226) must be paid to the nursing home.  Medi-Cal will pay the rest.


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 “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 send 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.

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.

Note:  The Federal Deficit Reduction Act (DRA) has been passed into law but not yet implemented in California.  When it is implemented, the DRA will make several important changes in Medi-Cal.

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