The Medicaid program is in place to provide a health care safety net for people with limited financial resources. Unlike Medicare, it is not specifically designed for senior citizens, but many senior citizens do qualify for Medicaid.
This program is administered by the federal government along with each respective state government, so each state has some latitude with regard to how the program is administered. Our firm practices in the state of California. Here in California, the program is called Medi-Cal.
When you work and pay taxes throughout your life, you earn retirement credits. You can earn as many as four credits per year. Once you have accumulated 40 credits, you will qualify for Medicare when you reach the age of 65.
Because of the relatively modest requirement, most people will qualify for Medicare, and many people who retire own a home and have some savings. If you have resources and you qualify for Medicare, you wouldn’t need Medi-Cal, and you wouldn’t qualify because it is a need-based program.
In spite of the above, a very significant percentage of seniors ultimately seek Medi-Cal coverage. This is because Medicare will not pay for long-term care. If you need help with your activities of daily living, you won’t be able to rely on Medicare for payment assistance.
Long-term care is very expensive, and most people cannot comfortably pay out-of-pocket.
How could you qualify for Medi-Cal to pay for long-term care if you have some resources? For many people the solution is a Medi-Cal spend down. You could spend or give away your assets before you apply for Medi-Cal coverage.
There is a look-back period to contend with if you want to spend down your assets prior to applying for Medicaid or Medi-Cal. Across the country there is a 60 month look-back period. If you divest yourself of assets within 60 months of applying for coverage, your application will be denied until you wait out a penalty period.
The penalty is calculated by comparing the amount of the divestitures to the average cost of long-term care in the state of your residence.
In the state of California things are different at the present time. There is a 30 month look-back period in California.
All of the states are supposed to concur with a federal mandate with regard to the duration of the look-back period, so the Medi-Cal look-back may be increased in the near future.
Medi-Cal Planning Consultation
Most American senior citizens will eventually need long-term care, so this is a matter that is relevant to all of us. Medi-Cal planning can be complex, and it can be difficult to navigate through the rules and regulations on your own.
If you would like to discuss Medi-Cal planning with a licensed elder care professional, contact us to schedule a free consultation.