Elder law attorneys assist individuals and families in developing estate plans to avoid depleting their assets should they become ill and need long term care. For those individuals who are already in a nursing home, elder law attorneys help them qualify for Medi-Cal benefits while maximizing the amount of money they are able to keep.
Here is an example of a family my office was able to assist:
Planning for someone to take residence in a skilled nursing home and being able to qualify them to have the Medi-Cal system pay for their care is all about having a thorough understanding of the rules. John and MaryAnn Anderson* had been married for several decades. MaryAnn became severely ill with a condition which would result in her losing her higher level cognitive abilities first, with the remainder of her more basic mental functions being lost over an extended number of years. Skilled nursing home costs in Santa Clara County are typically $9,000 – $12,000 per month. The financial impact of keeping MaryAnn in a skilled nursing home would be devastating in any situation.
To qualify for Medi-Cal to pay for MaryAnn’s skilled nursing home care, MaryAnn can own her own home but can’t have more than $2,000 of investment assets (including cash assets). John can’t have more than $119,220 of assets other than the home. John and MaryAnn had about $3,000,000 of assets consisting of their home and four residential properties, one of which had recently been inherited by John and constituted his separate property.
To qualify MaryAnn to be able to receive Medi-Cal assistance to pay for her skilled nursing home cost, I reluctantly recommended that they divorce. The division of assets in the divorce caused John’s inherited property and one half of the remaining assets to be removed from the Medi-Cal calculation. This left MaryAnn with her family home (remember this is exempt for qualification purposes) and two residential properties which John and MaryAnn had acquired many years earlier.
One of the Medi-Cal rules provides that if a Medi-Cal applicant has made a gift of assets within 30 months of applying for Medi-Cal with the intention of thereby qualifying for Medi-Cal (by reducing their assets below the $2,000 limit), the applicant is denied Medi-Cal for a number of months based upon a formula.
Medi-Cal uses the value shown on the real property assessor’s role to determine the “fair market value” of real property. And since the two residential properties had been acquired many years ago and were each valued at less than $20,000 on the assessor’s roles, I was able to show MaryAnn and John how to gift the two residential properties to their children resulting in only a two month disqualification to receive Medi-Cal benefits (starting with the month of the gift which occurred several months before MaryAnn went into the nursing home and thus lapsed before she needed the coverage).
I then showed MaryAnn how to transfer her home into a special trust known as a MIDGT (one of five techniques available) which will prevent the Medi-Cal system from filing a recovery claim against the home when MaryAnn eventually passes away.
Through a variety of techniques, I was able to help John and MaryAnn save all of the assets for which they had worked so hard.
Please keep in mind that Medi-Cal planning is very fact-specific and the above planning technique will not work in every situation. Before taking any action, contact an elder law attorney knowledgeable in the area of Medi-Cal law.
* Names have been changed for privacy
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.