MEDI-CAL PLANNING OVERVIEW
Medicaid is a benefits program that is primarily funded by the federal government and administered by each state. The rules vary from state to state. In California, the program is called Medi-Cal.
Unlike Medicare, Medi-Cal will pay for long-term care in a nursing home once you have qualified for an indefinite period as long as you maintain financial eligibility and still need nursing care. Medicare only pays for up to 100 days. Medicare also does not pay for treatment for all diseases or conditions. For example, a long-term stay in a nursing home may be caused by Alzheimer’s or Parkinson’s disease, and even though the patient receives medical care, the treatment will not be paid for by Medicare. These stays are called custodial nursing stays. Medicare does not pay for custodial nursing home stays. In that situation, you will either have to pay privately (use long-term care insurance or your own funds) or you will have to qualify for Medi-Cal.
What Does Medi-Cal Count?
To qualify for Medi-Cal, applicants must pass some fairly strict tests on the amount of assets they can keep. To understand how Medi-Cal works, we first need to review what are known as exempt and non-exempt assets.
Exempt assets are those that Medi-Cal will not take into account when determining eligibility for benefits. The following are examples of exempt assets:
- The home, no matter what its value. The home must be the principal place of residence of the Medi-Cal applicant or spouse. The nursing home resident must have an “intent to return home” even if this never actually takes place or even if it cannot take place.
- Personal belongings and household goods.
- One car.
- Burial spaces and certain related items for applicant and spouse.
- Up to $1,500 designated as a burial fund for applicant and spouse.
- Irrevocable prepaid funeral contract or burial trust.
- Immediate annuities.
- Value of life insurance if face value is $1,500 or less. If it does exceed $1,500 in total face amount, then the cash value in these policies is countable.
- The IRA of the Medi-Cal applicant if he or she is receiving at least minimum distributions.
- The IRA of the Medi-Cal applicant’s spouse, no matter the value and without regard to the spouse receiving distributions.
Non-exempt assets are those that Medi-Cal does take into account when determining eligibility for benefits. All money and property, and any item that can be valued and turned into cash, is a countable asset. This includes:
- Cash, savings, and checking accounts.
- Certificates of deposit and money market accounts.
- U.S. Savings Bonds.
- Other real estate (generally, the value for Medi-Cal purposes is the property tax assessed value).
- Other cars.
- Boats or recreational vehicles.
- Stocks, bonds, or mutual funds.
- Deferred annuities.
- Notes and deeds of trust carried back by the applicant and his or her spouse.
While the Medi-Cal rules themselves are complicated, it is safe to say that a single person will qualify for Medi-Cal as long as he or she has only exempt assets plus a small amount of cash and/or money in the bank ($2,000). A married couple can have exempt assets plus, in 2017, $120,900 of non-exempt assets.