Reuters reports that throughout most of California, the costs of long term care are rising faster than inflation, with the median annual cost for a private nursing home room here in San Diego coming to $86,688 (or about $237.50 a day). Judging by these numbers, your savings can quickly run out and your assets can soon be depleted when paying for long term care and medical expenses. You can act to help prevent these possible consequences with Medi-cal planning. Among other things, the Medi-cal program, with its joint federal and state funding, provides need-based help to persons who are age 65 or older, blind, or disabled, through payment for long term medical care in a skilled nursing home. Proper planning seeks to qualify applicants for government Medi-cal benefits by adjusting to meet eligibility requirements, while also protecting income and assets as permitted under California law.
Currently, to qualify for Medi-cal benefits, a single person can’t have more than $2,000 in “countable” or “non-exempt” assets, and a married person whose spouse will still live at home can’t have more than $109,560 in countable assets. Countable or non-exempt assets are generally assets that can easily be turned into cash. Examples of countable assets include second homes, bank accounts, stocks and bonds, and assets held in your living trust. Medi-cal rules also establish “exempt” assets that won’t be counted when deciding whether you or a loved one qualifies for benefits. For instance, the equity in your principle home will be exempt up to $750,000 if you are single and intend to return home. Whereas, if you’re married or have a child who is blind, disabled, or under 21 and lives in the home, then there won’t be a limit on the amount of equity exempt. More examples of exempt property include your personal belongings, household items, certain life insurance, and one car. Your income isn’t counted in determining if you qualify, but it can affect whether you’ll have to pay a share of the nursing home and medical costs. You can plan to meet Medi-cal eligibility through many different methods, such as by converting countable assets to exempt assets (e.g. by paying down your mortgage or buying a new replacement car), transferring assets to your spouse or family members, or filing a petition to increase the eligibility limit so you can keep extra assets. But no matter the strategy, the law must be carefully abided by and potential disadvantages have to be evaluated in light of your goals and circumstances. Certain actions can bring negative tax consequences that will outweigh the possible benefits, or can lead to penalties and lengthy periods of ineligibility.
If benefits are received, then Medi-cal will attempt to collect the payments back through an “estate claim” when the beneficiary passes away by looking to the assets belonging to that person at the time of his or her death. This includes assets that were previously exempt for eligibility purposes, but there are some exceptions. For example if the beneficiary’s spouse was living in a home owned by the beneficiary, Medi-cal will not collect until the spouse still living in the home has also died. Some assets can be legally transferred away during the beneficiary’s lifetime and won’t be subject to collection, but this should only be done when eligibility won’t be jeopardized. Also note that when it comes to Medi-cal, the rules and regulations are constantly changing, creating additional planning challenges. Just last year, in September 2008, major changes were introduced when Governor Schwarzenegger signed the Deficit Reduction Act (DRA) into law, which modified important Medi-cal eligibility rules for long term care. It’s to be expected that more change is on the way. On this note, a HealthAccess.org blog by Cynthia Craft reports that the Senate Health Committee recently brought experts together to discuss how to restructure the Medi-cal program if the federal government grants California a five-year waiver period starting in September 2010. If granted, Medi-cal will be able operate outside of current Medicaid rules in order to try out new changes. Regardless of what may happen, careful planning is essential to protecting your assets for your loved ones. Learn more about our Medi-cal help, and when possible, prepare early while you have the most options available to safeguard your estate from the rising costs of long term medical care. Even if you’ve already been denied Medi-cal, we can often help you reapply and correct previous mistakes. For experienced, up-to-date help with Medi-cal planning, contact San Diego Law Firm at (619) 794-0243.
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