More on Medi-Cal “Myths”
MYTH #1: An applicant must spend his resources down to $2,000.
TRUTH: An applicant 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 being the most important, that are exempt. 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 $95,100 above and beyond any exempt or unavailable property.
MYTH #2: There is a penalty for sheltering your assets by changing countable, non-exempt assets into exempt assets.
TRUTH: There is no such penalty. If done properly, this can be an excellent strategy for qualifying for Medi-Cal without impoverishing yourself or a family member.
MYTH #3: The at-home spouse of a nursing home resident receiving Long Term Care Medi-Cal can keep only $95,100 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 2005, this Community Spouse Resource Allowance is $95,100. It is possible, however, to have the CSRA allowance raised substantially above the basic $95,100 allowance. This is one of the most powerful and least understood Medi-Cal planning tools. This request can only be made at a Medi-Cal appeal hearing. However, if the non-investment income (i.e., Social Security plus any pensions) in the at-home spouse’s name is less than $2,378, by law, the request to raise the CSRA must be granted. The amount one is entitled to raise their CSRA is based on a fairly precise and predicable formula. In the majority of cases we 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.
MYTH #4: There is a 30-month ineligibility penalty for any 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 will 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 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 an elder law attorney. The San Diego Elder Law Center can develop a Medi-Cal qualification plan for your family, which may have a gifting component, if you desire.
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. We would be pleased to help you develop your recovery-avoidance plan, and draft any required documents.
MYTH #6: 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 fee 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 $2,378, 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 $2,378 per month. This reduces the income of the ill spouse payable as share of cost. This rule helps many married applicants reduce there share of cost to zero. If the Medi-Cal recipient is unmarried, or 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. We would be happy to help you and your family minimize the share of cost payable towards Long Term Care Medi-Cal.
San Diego Elder Law Center
Philip P. Lindsley, JD, CELA
Certified Elder Law Attorney
(619) 235-4357