What Does Medi-Cal Cover?
Once qualified, the Medi-Cal program will pay the entire cost of nursing home care, with one exception. That exception is for “share of cost.”
A single individual must pay almost all of their monthly income to the nursing home. The Medi-Cal program will pay the remainder. For married couples, the spouse in the nursing home must pay all of his or her monthly income, except to the extent that the at-home spouse needs some of that income to meet the minimum maintenance level of $3,090 per month, (for 2018).
These concepts are discussed below.
What Are the Medi-Cal Rules?
Assets. As a general rule, Medi-Cal will not begin to pay nursing home bills until the assets of the applicant are spent down to the resource limits. For an individual, the resource limit is $2,000. For a couple, the resource limit is $3,000.
However, where one spouse is the “community spouse” (the spouse not residing at the nursing home), that spouse is entitled to retain $123,600 in non-exempt assets (for 2018), in addition to the $2,000 retained for the “institutionalized spouse” (the spouse residing in the nursing home), for a total combined resource limit of $125,600.
This means that a couple is entitled to retain a total of $125,600 in non-exempt assets. This does not include “exempt” assets. Exempt assets include, among other items, your home, one vehicle and IRA’s in pay-out status.
Deeming of Assets. Under Medi-Cal Regulations, all of the assets in the name of the husband, in the name of the wife, and in joint names (such as the assets in your Revocable Trust) are pooled together. This means that Medi-Cal will consider all assets of the couple, whether they are owned separately or jointly.
Minimum Monthly Maintenance Needs Allowance (MMMNA) and Share of Cost (SOC). The Community Spouse is entitled to a monthly income of at least $3,090 (for 2018). There is no maximum limit. To the extent that the spouse’s monthly income is less than this amount ($3,090), a supplement can be obtained from the Institutionalized Spouse’s income.
Share of Cost (SOC). Each institutionalized person on Medi-Cal must pay almost all of his or her monthly income to the nursing home. This is known as “Share of Cost” (“SOC”). SOC is generally calculated by taking the Institutionalized person’s monthly income, deducting $35 for a “special needs allowance,” i.e., “toothpaste money,” and deduction of amounts paid for medical insurance, (including the Medicare Part “B” premium, currently $134.00 per month for 2018, but can be higher based on income). The remainder is the SOC that must be paid to the nursing home.
Lookback. At the present time, there is a 30-month lookback for transfers in California. This means that California can examine your records going back 30 months from the date of application to determine whether there have been any gifts of assets or transfers without consideration.
When application is made for Medi-Cal, there will be a question which asks if there have been any transfers made within the previous 30 months. If the answer is yes, these transfers must be disclosed to Medi-Cal. Failure to do so constitutes Medi-Cal Fraud, a criminal offense.
Transfer Penalty. A transfer of assets as a gift, or without sufficient consideration, results in a penalty. The penalty is a period of ineligibility equal to the number of months in a nursing home which the value of the transferred assets would have purchased at the rate of $8,841 per month, (for 2018). The maximum period of ineligibility is currently 30 months. There is no penalty imposed for transfers between spouses.
Estate Recovery. Medi-Cal, through the California Department of Health Care Services (“DHCS”), will attempt to collect any amounts paid through the Medi-Cal program once the individual or, if married, both spouses have passed away. Estate Recovery will be sought against any and all assets that are subject to a formal probate, however, there is no estate recovery against assets that are held in a trust or pass to beneficiaries without having to initiate the formal probate process.
OPTIONS AND STRATEGIES.
Our law office is dedicated to helping families preserve assets, qualify for Medi-Cal to pay for long-term care, and to structure ownership so as to avoid estate recovery, thereby preserving estate planning objectives. We will design a personal strategy for the family that meets all of your objectives.