Q: Once I qualify for Medi-Cal, will the quality of long term care I receive be sub-standard?
A: No. It is illegal for a long term care facility to discriminate against someone receiving Medi-Cal benefits. By law, Medi-Cal patients are to receive the same level of care as private pay residents.
Q: Is a married couple always required to spend down one-half of their assets before qualifying for Medi-Cal?
A: Not always. In fact, often times couples have over $100,000 and qualify for Medi-Cal benefits without spending a penny. Although there are income and asset criteria a couple must meet before one of them qualifies for benefits, federal and state laws were written to protect individuals from becoming impoverished if their spouse needs nursing home care. Medi-Cal planning is like tax planning in that legislation has provided legal exceptions to the general rules that, with good advice from a knowledgeable professional, can save Medi-Cal applicants and their families thousands of dollars.
Q: Is it true that under current Medi-Cal laws, a parent cannot make financial gifts to their children once they have entered a nursing home?
A: No. In fact, a proper gifting program can be a great Medi-Cal planning technique. At the time an applicant applies for Medi-Cal, the state will “look back” 30 months to see if any gifts have been made. Any financial gifts or transfers for less than fair market value during the look back period may cause a delay in an applicant’s eligibility. A proper gifting program requires calculating the penalties prior to making gifts.
Q: Is $14,000 per year the maximum an individual can give away if they are going to apply for Medi-Cal?
A: No. The $14,000 per year gift people ask about when discussing Medi-Cal Planning is a tax law figure and not relevant with respect to Medi-Cal’s specific asset transfer rules. In California, a transfer of nonexempt assets can result in a period of ineligibility which is the lesser of 30 months or the value of the transferred assets divided by the average private pay rate (APPR) at the time of application. For 2016, the “APPR” is $8,189.
Q: A Medi-Cal applicant’s house is considered “exempt” under Medi-Cal laws. Can an applicant give their house away without incurring penalties?
A: Yes, if done right. However, the negative income tax consequences to your heirs of receiving the home as a “gift” versus an “inheritance” may outweigh the benefit of making such a gift. But if done right, you can also avoid the negative income tax consequences.
Q: Once my spouse is approved for Medi-Cal, will any resources I receive affect my spouse’s eligibility for Medi-Cal?
A: In California, resources acquired after the spouse is institutionalized and before the spouse goes on Medi-Cal are not protected and will be counted at the time of application. However, once the spouse is eligible for Medi-Cal, any resources acquired after eligibility by the community spouse are protected and will not affect the institutionalized spouse’s eligibility. Resources held prior to the spouse’s institutionalization may be transferred under certain conditions.
There are a number of steps a Medi-Cal applicant can take to preserve their assets, ranging from gifting strategies, personal care contracts, private annuities and raising the Community Spouse Resource Allowance. What you need to remember is that the laws are constantly changing and the planning your neighbor did for their mother six months ago may not be proper for your mother tomorrow. Consult a knowledgeable elder law attorney for advice.2
ABOUT THE Litherland, Kennedy & Associates, APC, Attorneys at Law
Roy W. Litherland is an attorney whose practice emphasizes elder law and estate planning. Roy has practiced law in the greater Bay Area for over 35 years and is certified as a legal specialist in Estate Planning, Trust and Probate Law by the California State Bar Board of Legal Specialization. In addition to his extensive legal background, Roy was also previously licensed as a Certified Public Accountant. Although Roy has an extensive background in accounting, he retired his license to practice as a CPA to devote his time and energy entirely to the practice of law, specializing in estate planning, trusts, Medi-Cal planning, and probate. Roy is a noted speaker on living trusts, Medi-Cal Planning, and estate planning. He is a member and designated Fellow of the American Academy of Estate Planning Attorneys, an organization that fosters excellence in estate planning.
The Litherland, Kennedy & Associates, APC, Attorneys at Law is a member of the National Academy of Elder Law Attorneys and the California Advocates for Nursing Home Reform.