Medi-Cal: Protecting Income Under California Law

Medi-Cal Limits on Income

No limit on income to qualify. Medi-Cal eligibility is based on the value of "countable" assets, not the amount of income. Even a person with a very high income can qualify for Medi-Cal if their countable assets are below the minimum. (See, Medi-Cal & Protecting Assets for information on countable assets.)

Limits on income ill person can keep. However, under Medi-Cal, the basic rule is that an ill person can only keep $35 of income each month for personal needs, and can only use extra income to pay for:

• Uncovered medical costs, including medical insurance premiums and therapy ordered by a doctor but not covered by Medi-Cal,
• The cost of a private room if the ill person pays for the entire nursing home cost, and Medi-Cal is only required to cover medical costs,
• Income for an at-home spouse in the amount needed to bring them up to the legal minimum ($2,489 in 2006),
• Support for a dependent child living at home, with the amount set by law,
• Certain expenses for rental property belonging to the ill person.

The ill person's remaining income must be paid as a "share of costs" to help cover their medical and nursing home bills. Medi-Cal will then pay the uncovered amount and will also pay the Medicare Part B premiums. If the ill person's extra income is more than the total bills for that month, Medi-Cal will not pay. Medi-Cal also considers that extra income to be a "countable asset" that must be paid toward the nursing home or medical bills in the following month or months before Medi-Cal will pay.
 

Protecting Income for the At-Home Spouse

Minimum income for at-home spouse. An at-home spouse is entitled to keep at least the legal minimum of income ($2,489 in 2006) for their own use. First, all of the at-home spouse's separate income is counted, and if it does not reach the minimum, the at-home spouse may keep enough of the ill spouse's income to make up the difference.

Keeping extra countable assets to generate income. If the income of the at-home spouse and ill spouse together is still less than the legal minimum, the court can be petitioned to let the at-home spouse keep enough extra "countable" assets beyond the amount Medi-Cal normally permits ($99,540 in 2006) if those assets will generate interest or dividends that will help make up the difference. If the at-home spouse has expenses higher than the legal minimum (for example, because of their own poor health), we can petition the court to authorize the at-home spouse to keep enough extra "countable" assets to meet those expenses.

Keeping extra income. If the at-home spouse has health-care or other necessary expenses that require additional income above the legal minimum, we can petition the court to authorize the at-home spouse to keep more of the ill spouse's income to meet those expenses.

At-home spouse keeps own income & any assets later obtained. The at-home spouse may keep all income where the check is in their name alone, so long as they earned it themselves or it was paid from assets that belong only to them and not to the ill spouse. The at-home spouse may also acquire liquid or "countable" assets - such as by inheritance, gift, or earnings - after the ill spouse is on Medi-Cal without affecting the ill spouse's Medi-Cal situation.

Joint income. When income is paid in both spouse's names, or is paid from an asset where the ill spouse's name is on the title (such as with real estate, or a mutual fund), Medi-Cal will count half of that income as belonging to the ill spouse.

Living trust for at-home spouse. The at-home spouse may set up a living trust in their own name once the ill spouse's Medi-Cal application has been granted. However, the ill spouse cannot be a co-owner of the living trust, which is a "countable asset," without losing their Medi-Cal eligibility. The living trust can be set up so that if the at-home spouse dies first, the assets are transferred into a "special needs trust" that benefits the ill spouse without affecting their Medi-Cal eligibility. (Assets may also be left to an unrestricted testamentary trust, but this may affect the ill spouse's "share of costs" for their nursing home and medical bills and needs to be carefully planned.)

How San Diego Law Firm's Medi-Cal Planning Helps You Protect Income

San Diego Law Firm will work closely with you to develop a plan to protect the income of the ill person and at-home spouse as explained above. We'll develop your final plan so that your income and assets are both protected as much as possible at every step. And we'll carefully tailor your plan as closely as possible to fit your wishes and financial situation. We'll answer your questions, give you good legal advice, and prepare and file all legal documents and appear for you at court hearings. You'll receive the best possible legal help at all times.

We'll clearly explain our fees and the costs in advance. Given the staggering cost of nursing home care, our clients have generally found that benefits they receive from Medi-Cal planning - not to mention the benefits of our related tax advice, document preparation, and legal representation -- quickly exceed the investment they've made in planning. And the peace of mind in having legally and financially sound Medi-Cal planning in place is beyond compare.

If you or someone in your family is facing the costs of long-term care in a nursing home, and you are struggling with California Medi-Cal eligibility, we can help you. Please just call San Diego Law Firm for more information or an appointment 619-794-0243.