Due to an aging population, more Americans are finding themselves or their loved ones in need of nursing home care. While nursing home care is usually an option most people wish to avoid, it often is absolutely necessary. Of course, this doesn’t make it any less expensive and many find themselves depleting their life savings paying for care they need. The good news is that there are ways to avoid spending your life savings and still getting the care you need. One of those ways is through Medi-Cal planning.
As a reminder, Medi-Cal is the name for California’s Medicaid program. Medi-Cal can provide much-needed relief during a time when all you should be worried about is the care received. However, too many people are unaware of the opportunities or make some of the common mistakes that prevent them from accessing these important benefits.
Below are some common mistakes made when planning for Medi-Cal in California and how to avoid them. This list is not exhaustive and should only be used as a general guide. This is a complicated area of law and you should contact an elder law attorney in your area to examine your circumstances and provide you with a more specific plan. Learn more about what an elder law attorney’s role is in our blog, “What Can a California Elder Law Attorney Do for you or a Loved One?
Failing to start planning early:
Let’s face it, when you’re young and healthy, planning for long term care you may not ever need just isn’t something you think about. However, if you do end up needing long term care, not planning early can be an expensive mistake. When you’re healthy, you are likely to get a much better deal on purchasing long term care insurance. Long term care insurance should be taken advantage of before relying on Medi-Cal.
If long-term care insurance is not an option, then it may be wise to apply for Medi-Cal. To be eligible for Medi-Cal, there is a cap on the number of assets you can have. However, all assets aren’t “countable” assets and there are planning tools such as using a trust or an annuity to reduce the number of countable assets without exhausting them altogether. This should be done at least thirty (30) months before you need long-term care because Medi-Cal has a “lookback period” which counts asset transfers thirty (30) months prior to the need for care. That said, it may be more prudent to begin planning five years before you need long-term care as that is the “look back” in most other states which will apply to you if you move to one of those states later.
Believing it’s too late to plan:
Even after a senior has moved into a nursing home, you can still plan to take advantage of Medi-Cal benefits. As mentioned earlier, there are tools to protect some of the assets while still allowing them to meet the eligibility requirements for Medi-Cal. You or your loved one do not have to deplete your assets before seeking counsel.
Not taking advantage of safe harbors created by Congress:
While asset transfers within thirty (30) months prior to needing Medi-Cal will be taken into account when determining your eligibility, Congress has mandated exceptions to certain transfers that will not prevent you from being eligible for Medi-Cal. A few of these exemptions are transfers to disabled children, caretaker children, and funds put into special types of trusts.
Failing to use the protections provided for the spouse of a nursing home resident:
Congress did not intend for the spouse of a nursing home resident who is taking advantage of Medi-Cal to adhere to the same asset and income limits as the resident. While there are still caps on the number of assets and rules concerning income the spouse may have, they are generally much higher than allowed for the resident. There are also other protections such as the ability to purchase an immediate annuity, the right to petition for an increased community spouse resource allowance, and the right to petition for the spouse to refuse to comply with Medi-Cal’s application requirement to disclose a spouse’s assets, among others.
Medi-Cal is a complicated program with enormous benefits. It can be difficult to navigate, and before beginning your application process, it would be wise to consult with an elder law attorney who knows the ins and outs of this process and can make the best decisions on your behalf. If you wish to begin the application process for Medi-Cal or have any questions about what you have read, please do not hesitate to contact our Orange County office or schedule an appointment with us to discuss your Medi-Cal planning legal matters.
