San Diego Elder Law
Help your loved one get quality nursing home care
Medi-Cal is California’s program for administering federal Medicaid funds. Medi-Cal has several different programs. The most misunderstood is “Long Term Care” coverage. Most people first hear about Medi-Cal Long Term Care coverage when a family member or loved one is hospitalized, then discharged to a rehabilitation or skilled nursing facility. Medicare may pay for this extended care for a while…but not long. The maximum period Medicare will pay for qualifying individuals is 100 days, but most families will find themselves receiving a notice of termination of Medicare long before that. For those who do not have long term care insurance, the choice then becomes to pay the cost themselves, over $9,000 per month, or apply for Long Term Care Medi-Cal. Few could afford to private pay for long without seriously impacting the financial security of the spouse and family. Both married and unmarried individuals also worry as the estate they intended to pass to their children or heirs is rapidly eaten up by nursing home bills.
The clear alternative is the Long Term Care Medi-Cal program. Medi-Cal will pay for 100% of nursing home expenses for those who qualify. Some may need to pay a “share of cost,” but many will not. Even those with a relatively high share of cost pay far less than the private pay rate for a nursing home. With our assistance, the majority of those who consult with us can qualify for Long Term Care Medi-Cal, legally preserving most, if not all, of their assets for themselves and their loved ones. We can help you minimize the “share of cost,” and often use techniques allowing you to direct your share of cost for payment for beneficial therapy for your family member. We can also often help avoid recovery claims by the State.
There is an unfortunate amount of misinformation and misunderstanding about how to qualify for Long Term Care Medi-Cal.
Much of this misinformation is dispensed by professionals who believe they understand the programs, but do not. Some of this misinformation actually comes from Medi-Cal eligibility workers not familiar with all of the rules of Long Term Care Medi-Cal, or who confuse the rules with those for other Medi-Cal programs. As a result, many people think they must spend all their assets down to less than $2,000 to qualify for Medi-Cal. This is almost never true. While an unmarried applicant can have no more than $2,000 of “countable” resources in their name, many assets are considered “exempt” or “unavailable.” Their home, for example, is 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 $128,640 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. A Certified Elder Law Attorney can advise you whether or not you would qualify for this increase and explain how this is done.
Our Medi-Cal Planning goals are:
- Obtain eligibility for Long Term Care Medi-Cal as soon as possible, and avoid spending down all of the family assets private paying.
- Minimize the “share of cost,” the amount the applicant must contribute each month prior to full Medi-Cal coverage. There are also innovative tools that allow share of cost to be directed to needed supplemental therapy.
- Protect the spouse. There are substantial protections for a spouse, both for asset and income protection. We are aware of what they are and use them.
- Recovery avoidance. Medi-Cal, under some circumstances, may attempt to recover what they paid after the death of the benefit’s recipient. However, there are methods of avoiding recovery. Although not available in all cases, we know the recovery avoidance methods and how to use them. Most of our clients have no recovery actions.
The rules concerning Medi-Cal qualification, share of cost, and recovery are complicated. Many thousands of your family’s dollars may be at stake. Every year thousands of people unnecessarily private pay because they don’t know their rights. Don’t let this describe your family. Before incorrectly assuming you will not qualify for Medi-Cal, please consult with us, or another qualified Elder Law Attorney. If you wish, we will handle the entire Medi-Cal application process.
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 that can avoid this. Most importantly, the State cannot recover during the life of a surviving spouse. In some cases though, they may attempt to recover after the surviving spouse passes, but before the estate is distributed to their children or beneficiaries. There are, however, exceptions to this that offer planning opportunities. Significant among these exceptions: 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 a Certified Elder Law Attorney experienced in Medi-Cal planning before attempting recovery-avoidance planning or asset transfers. Much may be at stake in doing this right. We frequently see families where they have attempted their own asset transfers, either for perceived eligibility or recovery purposes, which has generated ineligibility and catastrophic tax impacts far worse than any recovery. We would be pleased to help you develop your recovery-avoidance plan, and draft any required documents to assure it is done correctly.
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 $128,640 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. A Certified Elder Law Attorney can advice you whether or not you would qualify and explain how this is done.
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. There is also no “look back” period for such transactions.
MYTH #3: The at-home spouse of a nursing home resident receiving Long Term Care Medi-Cal can keep only $128,640 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 2020, this Community Spouse Resource Allowance is $128,640. It is possible, however, to have the CSRA allowance raised substantially above the basic $128,640 allowance. This is one of the most powerful and least understood Medi-Cal planning tools. If the non-investment income (i.e., Social Security plus any pensions) in the at-home spouse’s name is less than $3,217, 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 $3,217 per month. The amount one is entitled to raise their CSRA above the $128,640 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. 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.
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. San Diego Elder Law Center can develop a Medi-Cal qualification plan for your family, which may have a properly designed gifting component, if you desire. Other states have look-backs of 36 and 60 months, and calculate penalties very differently. Although California will adopt the 60 month look back period and stricter gifting rules in the future, it is still 30 months for us at this time. A Certified Elder Law Attorney can make sure you are being advised as to existing rules for the state of California.
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 a Certified 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: 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 $3,217, 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 $3,217 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.
Most “Medi-Cal Planners” are in fact insurance agents or financial planners making large commissions selling “Medi-Cal Exempt” annuities. We are a law firm, not insurance agents. In our experience, annuities are seldom advisable. If properly drafted, they are “exempt” assets not counted by Medi-Cal. However, they are high in commission charges and low in liquidity. They have substantial penalties should you need the money, and will generate a stream of income that must be turned over to the nursing home as “share of cost.” Upon the death of the Medi-Cal beneficiary, the State of California may recover for the benefits paid against any annuity remainder. There are many strategies superior to annuities, but don’t expect to hear about them from people who make their living selling annuities! An elder law attorney familiar with Medi-Cal planning can do much better for you…whether our office or another.
We suggest you look for a Medi-Cal planning firm that affirms they are members of the National Academy of Elder Law Attorneys (NAELA). An elder law attorney will charge you only for their time, and will not be profiting from selling you a poor product.
Typically, our initial contact with a family is related to a crisis situation necessitating immediate action or planning, or a recent diagnosis that will eventually lead to long term chronic care issues. Being unexpectedly faced with these situations, trying to identify what needs to be done, and suddenly finding oneself in a complex maze seeking legal, medical, and social support, can be daunting and overwhelming. The most common thing we hear is “I don’t even know where to begin!”
The first step is to meet with our clients and their families to identify what is happening, and what their needs are, both immediate, and long term. Our Care Coordinator will perform a healthcare assessment and consider appropriate placement and supportive care. While this is going on, Mr. Lindsley and our legal staff will analyze the family income and assets, and help identify resources, public benefits, and prioritize what needs to be done. Our legal team and care coordinator will work together to make sure that the legal and financial plan serves the care plan, and that the care plan considers the appropriate use of financial resources. We will meet with the family to discuss these findings and offer specific care and legal recommendations. We will listen to their questions and concerns and work together to implement the legal and care strategies that best meet their needs and to ensure the families short term and long term needs are firmly in place.
As the care needs change, we will update the Life Care Plan to address the client care needs and quality of life choices may change. We will continue to be your advocate throughout the entire Life Care Plan term.