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"How to get Medi-Cal coverage for your nursing home care... without selling your home or leaving your family without a dime... Surprising ways to pay for your assisted living and long term care costs."

Elder Law Today Newsletter | November, 2012

 

The New, More Difficult Medi-Cal Qualification Rules Will Be Here Soon

The Medi-Cal qualification rules for nursing home care are about to change, and not for the better. If you have not updated your estate planning documents to include asset protection and government benefits planning language, you should definitely consider doing so now. In addition, if you are considering doing planning with regard to asset protection and for Medi-Cal qualification, you should contact your elder law attorney as soon as you can.

We have been advised by the Secretary of State’s office in Sacramento, that California will very soon adopt the more stringent Federal, Deficit Reduction Act (DRA) rules for Medi-Cal qualification. These federal rules were originally signed into law in Washington D.C. on February 8, 2006, and Governor Schwarzenegger signed the DRA into law in California on September 27, 2008. For the next few months we will still be able to continue to plan under the older, more lenient rules, but after that the rules will change and planning will be more difficult. I will explain some of the changes as follows:

LOOK-BACK PERIOD FOR TRANSFER OF ASSETS

Currently, California uses a 30-month look-back penalty period for gifting or transferring assets to create eligibility for Medi-Cal benefits. The period of ineligibility begins at the time of the transfer, and the divestment penalty divisor is $7,092. For instance, if you transfer $30,000 to a child in order to reduce your assets to $2,000 to obtain Medi-Cal qualification for a single person, you will have 4.23 months of ineligibility, which is rounded down to four months of ineligibility ($30,000 / $7092). So, if you make this transfer of assets in November 2012 for instance, you will be eligible for benefits in March 2013. Note: the months of ineligibility are counted starting at the month of the transfer. If the transfer was made more than 30 months prior to the Medi-Cal application, of any amount, there is no penalty period of ineligibility.

The new DRA rules unfortunately increase the penalty look-back period to 60 months. Note: the period of ineligibility starts the month you enter a nursing home and apply for Medi-Cal unlike current rules that use the date of transfer of assets to determine Medi-Cal eligibility. The new DRA rules will use the $7,092 divisor in the Medi-Cal formula mentioned previously, but this number will increase annually.

TRANSFER OF YOUR HOME

Currently, your home (which can be of any value) can be established as an exempt asset and be transferred to your spouse or a child for instance, in order to avoid a Medi-Cal lien, and without the look-back period being applied. The new rules will still allow transfers of the home as an exempt asset without penalty, but will apply an equitable value limitation in an amount to be decided, but could be $750,000 for instance.

FRACTIONAL PERIODS OF INELIGIBILITY

Currently, when gifts are made and the period of ineligibility is calculated for Medi-Cal qualification, the present rules allow us to round down to the nearest whole number. So 4.3 months of ineligibility becomes four months of ineligibility. Under the new DRA rules, fractional periods of the month will be counted for eligibility purposes, thereby making periods of ineligibility longer. For example, 4.3 months of ineligibility will remain 4.3 months and will not be rounded down to four months.

We will still be able to do last minute planning for Medi-Cal benefits, but the new DRA rules will make last minute government benefits planning more difficult. As a result, we should do our planning as far in advance as possible. If you or your older loved one is experiencing physical or memory issues, you should not wait any longer to see your elder law attorney.


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