The home (principal residence) of a Medi-Cal applicant is still not counted as an asset for qualification for Medi-Cal if you take certain steps. In order to qualify the home as an exempt asset, the applicant must confirm in writing that he intends to return to his home after a stay in a nursing home. The home is also exempt for qualification if his spouse or a child under the age of 21 resides in the home. There are additional ways to confirm the home as an exempt asset for Medi-Cal qualification, but confirming the exemption is usually not a problem.
Under the Deficit Reduction Act, which has not to date been implemented in California, we believe that a home will not be exempt if it has more than $750,000 in equity. However, to date this is not the law, and we will be sending out e-mail blasts when we get more information in this regard.
However, just because the home can be made exempt for qualification for Medi-Cal, does not mean that the home is protected from a Medi-Cal lien after you die. If a Medi-Cal recipient dies with the home in his estate, the state will want to recoup its loss against the home. If a surviving spouse is in the home, the state will not pursue a lien until the surviving spouse dies. If the home is not in your estate when you die, the state cannot recover against it.
There are techniques allowed under the Medi-Cal regulations which allow us to transmute (transfer) the home to a spouse prior to death without penalty, in order to avoid a Medi-Cal lien. We can also transfer the home to other family members or to third parties without penalty under the regulations. However, any such transfers must be done correctly under the regulations. When making such transfers, we must take into account capital gains and assessor re-assessment issues. At times “life estates” are reserved in the home to the applicant for tax purposes. Your elder law attorney can help you with your long term care planning regarding the home.
This information is not to be taken as legal advice, and you are encouraged to see your elder law attorney. At the Law Offices of Michael J. Young, at 1931 San Miguel Dr., Ste. 220, Walnut Creek, CA www.WalnutCreekElderLaw, 925-256-0298, lawyoung1@gmail.com we practice Elder Law and we help Baby Boomers, Seniors and families through their Elder Care Journey. We help families with long-term care planning, asset-protection plans, comprehensive estate planning, wills, trusts and powers of attorney. We also help Baby Boomers and families get their “Ducks in a Row” in order help them qualify for Medi-Cal and the VA Aid & Attendance Improved Pension benefit.