There are so many misconceptions surrounding Medi-Cal with respect to financial gifts, that we thought we would address some of the more frequently asked questions:
Q: “Is it true that under current Medi-Cal laws, a parent cannot make financial gifts to their children once they have entered the nursing home?”
A: No. In fact, a proper gifting program is 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 but under current Medi-Cal rules this can be avoided.
Q: “Is $14,000 per year the maximum my mother can give me if she is 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. The maximum monetary figure Medi-Cal applicants need to concern themselves with is the “penalty divisor” for California. The penalty divisor is the state-assessed average cost for nursing home care by which the state assesses Medi-Cal penalties.
The penalty divisor is currently $7,549 for California (in the year 2013, this figure was $7,092, which is one of the reasons why consulting someone knowledgeable in Medi-Cal law is imperative).
Q: “What if my mother just gives me all of her money to hold on to for her. Can I tell the state my mother does not have any money and qualify her immediately for Medi-Cal?”
A: Absolutely NOT. Failure to report gifts made by a Medi-Cal applicant constitutes fraud. Further, let’s say your mother had $45,000 when she entered the nursing home. If she were to give you all of her money in one lump sum, the gift would result in a penalty in California of 6 months from the date of the gift.
Q: “I know that my mother’s house is considered “exempt” under Medi-Cal laws. Can my mother just give me the house without incurring penalties?”
A: Yes. Unlike most states, California will not disqualify someone from receiving Medi-Cal (Medi-Cal) because they have given away their home. However, substantial negative income tax consequences can occur unless it is done carefully.
There are a number of steps a Medi-Cal applicant can take to preserve their assets, ranging from gifting strategies, personal care contracts, raising the Community Resource Allowance, etc… What you need to remember is that the laws are constantly changing and the planning you did for your mother-in-law six months ago may not be proper for your mother tomorrow. Consult a knowledgeable elder law attorney for advice.
From Our Geriatric Care Managers Re: Long Term Care Bed Availability: Obtaining beds in a skilled nursing long-term care facility is becoming almost impossible in Santa Clara County unless one is admitted to the hospital, stays over 3 midnights, and requires skilled care. We recommend our clients call us as soon as possible after a loved one is admitted to the hospital so we can help with placement if long-term care is needed.
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