You may see it coming: Much as you want to and hard as you try, you just can’t take care of your ill spouse at home anymore. At this emotionally difficult time, the last thing you need is the stress of not knowing where to find the money to pay for the steep costs of institutional care. This is why Medi-cal matters.
Advance planning is a must. As as soon as you can – ideally at least three years before serious health problems arise – take advantage of many elder attorneys’ willingness to talk with you for free, or for a modest initial-consultation charge.
We are here to help you navigate the complexities of the Medicaid program. The first thing to know is that states operate their Medicaid program under different names. In California, we call it Medi-Cal. Second, Medi-Cal is a governmental fund available to meet the staggering expense of institutional care, but the ins and outs of the qualification rules are complicated, and mistakes can be costly. Here’s a thumbnail to help you grasp what your attorney will be telling you.
“Resources” and “Income”: The Difference
Medi-Cal assistance is available only to those who own very little. The Medi-Cal rules determine what “owning very little” actually means. A person can only own around $2,000.00 of what Medi-Cal calls “resources.” However, the good news is that if you are married, your spouse may own much more than that as we explain in more detail below.
Resources include cash in the bank, CDs, the cash value of insurance policies, investments, and the like. Income includes regular paychecks, Social Security, or payments received for child support. Both income and resources are potentially “counted” by Medi-Cal as “available.” To qualify for assistance, available income and resources must be carefully spent or transferred away.
Some resources are not counted or, in other words, are exempt. This means the Medi-Cal rules exclude them from adding up to the $2,000.00 limit. These resources are sheltered from Medi-Cal’s requirement that the applicant must spend down almost everything before assistance will be available.
A married couple’s residence, one motor vehicle, household goods and furnishings, medical equipment, jewelry, and other items are exempt. This means that an ill spouse can still qualify for Medi-Cal assistance even if the couple owns those resources. There’s no need to give them away or sell them to qualify.
The distinction between “exempt” and “non-exempt” assets can be tricky, though, and should first be assessed by a qualified elder-law attorney before any action is taken.
What the Well Spouse Can Keep
The Medi-Cal rules permit a spouse who remains at home to keep a portion of the couple’s resources. This is known as the “community spouse resource allowance” (CSRA). Of course, you’d like to see the well spouse keep as much as possible within the CSRA limits. Planning can arrange the distribution of resources to make that happen.
Here is where the difference matters between “resources” and “income.” Medi-Cal distinguishes between the well spouse’s income and the couple’s resources. Resources over the CSRA limit must be spent down or carefully transferred. As to income, the well spouse can keep it up to a certain level, so he or she will have enough money to live on. The Medi-Cal rules call this the “monthly maintenance needs allowance” (MMNA)
For example, if the well spouse gets Social Security benefits of only $500.00 a month, but her allowed MMNA is as high as $2,000.00, the well spouse would be able to retain some of the ill spouse’s income as well. If that is still not enough to support the well spouse, it might make sense to convert some of the couple’s resources into raising his or her income up to the MMNA limit or go to court or an administrative hearing to seek to raise the income or asset limits. These are not simple matters, though, and should be done only on the advice of a qualified elder-law attorney.
Planning for Medi-Cal eligibility can be complicated. Please consult an elder-law attorney as soon as possible. The sooner you plan, the more strategies are available to protect your resources. An initial consultation with a qualified elder-law attorney, for free or for a modest amount, could save you many thousands of dollars.
Don’t delay. Our Orange County attorneys can help you or a loved one take the next steps for legal planning. Please contact us or schedule an appointment with us to discuss your Medi-Cal planning needs.
Do You Have Any Questions?
Kevin Snyder is a husband, father, and an Orange County estate planning attorney at Snyder Law, PC in Irvine, California. He’s all about family and passionate about estate planning, elder law, and veterans. He founded Snyder Law to help people be prepared and have the peace of mind they are protecting their families and aging parents for when life happens.