What is Medi-Cal Planning, who needs it, how does it work and why is it important?

Have you thought about the possibility that you or your loved one may someday move into a nursing home? How are you planning to afford the high cost of elderly care?

It’s unfortunate that many seniors are paying the full price for nursing home care out of pocket – draining their hard-earned life savings within months instead of years.

Don’t let this happen to you and your family.

For your own peace of mind, read on to understand the basics of Medi-Cal Planning and secure eligibility for long-term care benefits for the elderly.

What is Medi-Cal for Seniors?

Medi-Cal is the state’s version of Medicaid that provides California’s poorest seniors with vital health insurance coverage and a safety net for long-term care when they have exhausted their own financial resources.

How is Medi-Cal different from Medicare?

Medi-Cal is a state program while Medicare is a federal health insurance benefit. Medicare covers many healthcare expenses including in-patient and out-patient care, and prescription drug coverage. It does not, however, cover long-term elderly care unlike Medi-Cal.

Who stands to benefit from Medi-Cal?

Medi-Cal is designed to provide comprehensive health care coverage for low-income seniors, children and people with disabilities. But you don’t have to be necessarily impoverished to become eligible for its benefits. In fact, many middle-class seniors rely on Medi-Cal to afford long-term care.

Monthly nursing home bills average between $8,500 to $13,500 a month in California. These costs could drive even seniors with a sizable income to financial ruin within months from entering a nursing home.

Thankfully, there are provisions within Medi-Cal that allow you to protect your assets, secure a financial cushion and still be able to qualify for its long-term care benefits.

How can you become eligible for Medi-Cal?

In demonstrating eligibility for Medi-Cal’s long-term care benefits, two things matter – your assets and your income. Understanding Medi-Cal’s prescribed limits will guide you with your planning.

Asset Limits

Medi-Cal determines eligibility by assessing the value of your assets. Most assets such as bank accounts, stocks and bonds, real estate, cars and boats, and some trusts are considered countable assets. Below is a short list of assets that are exempt from being “counted”.

  1. Your home or your principal place of residence
  2. Your personal belongings such as clothing, jewelry, furniture and other household items
  3. Your one motor vehicle or your primary mode of transportation
  4. Your prepaid funeral plan worth $10,000 or less
  5. Your life insurance policy worth $1,500 or less
  6. Other assets deemed “inaccessible” because they are protected by a will or a trust

Medi-Cal’s 2020 guidelines state that a nursing home resident should have no more than $2000 in countable assets. A resident’s spouse who does not live in a nursing home can keep half of the joint countable assets with a maximum total value of $128,640.

Income Limits

Medi-Cal sets income limits to nursing home residents and their spouses. As of 2020, a nursing home resident and their spouse is allowed to have $35 each per month. The excess monthly income is paid to the nursing home to cover the cost of care.

When is the best time to start Medi-Cal Planning?

Pre-need Medi-Cal Planning

Ideally, you should secure your eligibility for Medi-Cal long before you step foot in a nursing home. Pre-need Medi-Cal Planning anticipates the need for nursing home care in the future while you’re healthy.

An effective strategy in Pre-need Medi-Cal Planning is the Irrevocable Trust – one that cannot be changed after it is created. It works by protecting your income and assets from being “counted” by Medi-Cal. In an Irrevocable Trust, your assets are owned by the Trust and not by you as an individual. Minimizing your countable assets allows you to qualify for Medi-Cal benefits when the need arises.

But not all Irrevocable Trusts meet Medi-Cal’s guidelines. For example, if your spouse is receiving payments from the Trust, then a portion of it would be considered “countable” and possibly disqualify you from Medi-Cal.

Crisis Medi-Cal Planning

If your loved one suddenly falls ill and the doctor tells you that they will be needing full-time care in a nursing home, what do you do? Is it too late for Medi-Cal Planning?

It is never too late to seek the help of a legal professional to facilitate Medi-Cal Planning especially during a health crisis. Many families make the unfortunate mistake of assuming that their only option is to pay out of pocket which could quickly deplete their life-long savings.

An experienced estate planning and elder law attorney will work with you to put a crisis plan together even if your family member is already in a nursing home.

Where can you go for help with Medi-Cal Planning?

Engaging a legal professional can help you secure Medi-Cal benefits to mitigate the cost of expensive long-term care. Connect with our team at Crider Law to help you navigate the complexities of estate planning and elder law and ensure that you have the best Medi-Cal strategy in place.

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