Our practice is exceptional in making available trust language that may ease application for long term care benefits under Medi-Cal (California's version of the federal Medicaid program). People sometimes think of Medi-Cal as a poverty program, but some people who own a house and have modest savings may still need Medi-Cal because Medicare covers only very limited periods of long term skilled nursing home care. If you choose, we can design your documents to coordinate with Medi-Cal application regulations.
Medi-Cal for Long Term (Skilled Nursing Home) Care
Nursing home care in this country is expensive. In California, the officially calculated Average Private Pay Rate for nursing home care in 2013 was $7549 per month. Without long term care insurance, it is difficult for many people to pay such costs. Medi-Cal is the only publicly funded program that covers long term nursing home care for some chronic conditions.
Medicare Nursing Home Coverage is Limited
Many people mistakenly believe Medicare will cover skilled nursing home care. In fact the coverage Medicare offers is very limited. For example, patients generally have to spend three days in an acute care hospital before they qualify to receive Medicare payments for skilled nursing care, and then the care must be related to the same acute illness or episode as the hospital stay. If this requirement is met, Medicare will pay up to 100% for the first 20 days, and a copayment for the 21st through 100th days of nursing home care but will pay nothing after that. Medicare payments do not cover nursing care treatment at all for diseases such as Alzheimer’s or Parkinson’s disease, because those require custodial care – as opposed to acute care, which is medical care for a sudden accident or event such as a hip fracture.
Who May Receive Medi-Cal for Long Term Care?
People who receive Temporary Assistance for Needy Families (TANF), CalWorks benefits, or Supplemental Security Income (SSI) automatically qualify for Medi-Cal. Single people who do not receive such public benefits must have very low liquid assets, usually $2,000, to be eligible for Medi-Cal. There is considerably more flexibility for married people. The sick spouse who needs Medi-Cal must be impoverished and may have only about $2,000 in liquid assets, but the well spouse may have up to $115,920 (as of 2013) in liquid assets.
Exempt Assets for Medi-Cal Eligibility
Many types of assets are not counted in calculations of Medi-Cal eligibility. The most important exempt asset is a “principal residence” , defined by California law as, “[T]he home, including a multiple-dwelling unit, in which the individual resides or formerly resided,” so long as the ownership and residency situations meet certain criteria.
(California Welfare and Institutions Code Sections 14006(b) and 14006.15.) This is a very broad exemption. The home may still be exempt even if the applicant is absent from it, if
the applicant intends to return home. An attorney should be consulted if there is any question about the exemption or Medi-Cal eligibility.
A limit is about to be enforced on the home value exempted for Medi-Cal applications. The federal Deficit Reduction Act of 2005 (DRA) required states to set caps on the amount of equity long term care benefit applicants or recipients may have in their primary residences. State legislation (W&I Code Sec. 14006.15(b)) has now set California’s cap at the maximum permitted level of $750,000. However, the cap will not take effect until state regulations interpreting it have been finalized. Proposed regulations were published for comment in September 2012. As of September 2013 the regulations had not become final.
This could change at any time, however. For updates please refer to the CANHR site.
Furthermore, there are several ways to calculate an "equity interest" in property. Sec. 14006.15(a)(1), defines the value of an "equity interest" as the assessed value of a property minus encumbrances, which could help some people who acquired property a long time ago.
Exemptions for specific types of property, including real estate, are currently listed in the California Code of Regulations, Title 22, Division 3, Subdivision 1, Chapter 2, Article 9, Sections 50401 through 50489.9.
For further information about Medi-Cal eligibility and long term care options, the San Francisco-based nonprofit California Advocates for Nursing Home Reform (phone: 415-474-5171) is an excellent resource.
Estate Planning That Eases Application for Medi-Cal
Any person who requires Medi-Cal assistance to obtain skilled nursing home services must first become impoverished. However, for a married couple, the well spouse may still be able to retain substantial assets. The sick spouse may transfer assets to the well spouse as long as the sick spouse can make an informed decision and sign his or her name. However, there is a problem if the sick spouse suffers from a stroke or is otherwise no longer able to sign a document. Court intervention may be necessary to transfer documents from the sick spouse to the well spouse.
We can draft documents that prepare for these scenarios -- for example, by allowing assets to be transferred between spouses if one spouse becomes incapacitated. Our documents may reduce the likelihood of a need for court intervention in the event of one spouse's incapacity.
Medi-Cal for Homeowners
During a patient's life, a house is an exempt asset and therefore not a barrier to Medi-Cal benefits. However, after the deaths of both a Medi-Cal recipient and his or her spouse, the home is subject to Medi-Cal "recovery," meaning the state can institute a claim against the estate of the deceased. Generally, recovery is for costs incurred after the recipient turned 55 years of age for Medi-Cal, or for costs incurred at any age for a recipient in a nursing home.
Fortunately, Medi-Cal will not implement recovery if the patient is survived by a minor (under 21) or blind or disabled child of any age. A child of the deceased person who lived in the home as a caregiver may also be able to stave off recovery. A "hardship waiver" may be filed within 60 days from the notice of the claim for recovery.
A possible option, which may or may not be appropriate, is to transfer most of the patient's equity in the exempt house to the people who the patient would want to inherit the house, while the patient retains a "life estate" right to continue using the property as long as he or she is alive.