Saturday, 22 June 2024

Estate planning: The basic Medi-Cal concepts

Many California families depend on Medi-Cal to pay for long-term residential skilled nursing care, and also for "medically necessary" services; that includes, but is not limited to, hospitalization, nursing home care, prescription drugs, physician's visits, x-ray and laboratory tests, adult day health care, prosthetic and orthopedic devices, hearing aids, some dental care, hearing aids, home health care services, and some medical equipment.

Who is eligible for Medi-Cal? Becoming eligible is a two-step process: First, one must be linked to Medi-Cal; and, second, one must not exceed Medi-Cal’s strict resource limitations.

How is one linked? The following three classes of persons are linked to Medi-Cal: “seniors,” “persons receiving SSI benefits” and “disabled persons.” Seniors, persons 65 years or older, are automatically linked, as are persons receiving any monthly SSI payments, regardless of age. Lastly, “disabled persons” are persons found to be disabled under Social Security standards. Usually a Social Security Administration disability hearing is used to establish disability, but sometimes the Department of Social Services may use its own physicians.

How much may one own? One cannot own more than a very limited dollar amount of available, countable resources (assets). That threshold is presently $2,000 for an individual, and $3,000 for a family. Countable resources do not include exempt assets, such as a primary residence, personal property (unlimited value), business assets (a time-limited exemption), musical instruments, marriage rings, a vehicle (one per family), a burial plot, and retirement accounts (provided they are paying required minimum distributions if the participant is age 70 ½ or older).

In the case of a couple, where one spouse is receiving Medi-Cal for residential skilled nursing care, the stay-at-home well spouse (i.e., so-called “community spouse”) is entitled to retain further (otherwise countable) resources equal to the so-called “Community Spouse Resource Allowance” (CSRA) – currently around $110,000 (2009). The CSRA is most commonly used to shelter cash and investment accounts and helps to provide the stay-at-home (well) spouse with an income stream on which to continue to live at home.

How does one deal with excess assets? To qualify, many persons convert their excess available, countable – nonexempt assets into exempt assets, gift assets, spend-down other countable resources on necessities (although any purchase for fair value received counts for spend down); or they make the assets non-available (by placing it up for sale, e.g., listing real property with a broker).

This can become complicated when a person with dementia is involved. Often, court approval to gift assets between spouses is necessary. Furthermore, and very importantly, gifting of countable resources done within Medi-Cal’s so-called “look-back” period will create periods of ineligibility. The current look-back period is thirty-six months for gifts made directly between persons and sixty-months for gifts made from a trust.

Next is determining one’s share of cost – i.e., how much one must pay before Medi-Cal (a payor of last resort) pays. For persons living in residential skilled nursing facilities, all income, except a $35 a month allowance goes to pay share of cost. There is an exception when the stay-at-home spouse receives less than the so-called “Minimum Monthly Maintenance Needs Allowance” (‘MMMNA’), currently around $2,700/month, in which case the shortfall may be deducted from the incapacitated spouse’s income (i.e., before paying share of cost) to bring the well spouse’s income up to MMMNA, so far as possible.

After the Medi-Cal recipient dies, the Estate Recovery Unit must be notified, and the State has 90 days to “bill” for what Medi-Cal paid-out. Interestingly, medical services received before age 55 years of age are not subject to recovery. That exception, however, does not apply to skilled nursing home services.

Lastly, Medi-Cal applications involve stringent scrutiny. All bank statements need to be submitted going back three months before application, as well as ‘back-up’ documents to entries such as ‘income’ deposits, or payments when spend-down is involved. Also, documents such as birth certificate, driver’s license and social security cards must be provided.

Dennis A. Fordham, attorney (LL.M. tax studies), is a State Bar Certified Specialist in Estate Planning, Probate and Trust Law. His office is at 55 1st St., Lakeport, California. Dennis can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 707-263-3235.

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