Medi-Cal Estate Planning for Long-Term Care

California Medi-Cal Planning & Asset Protection

One of the goals behind Medi-Cal estate planning is to protect your countable or non-exempt assets (assets other than your home) from being consumed by long-term care costs. Keep in mind that nursing care can exceed $200,000 a year and most people who suffer a catastrophic illness or disability are forced to apply for Medi-Cal. In 2017 the applicable law in California is still the Medicare Catastrophic Coverage Act (MCCA) of 1988. Under MCCA, there are certain planning techniques that we can use to avoid a spend-down of your money and other countable assets and help you to qualify for Medi-Cal without triggering a period of ineligibility for Medi-Cal benefits.

The much tighter rules under the Deficit Reduction Act (DRA) of 2005 will not go into effect until final regulations are adopted in California. The state statute implementing DRA (SB 483) makes these rules effective only prospectively and not retroactively. Since October 2014, there have been no updates regarding the progress of implementation of the DRA regulations, when the DRA regulation packages were still in the process of being drafted or redrafted. According to California Advocates for Nursing Home Reform (CANHR), “given the workload of DHCS on the implementation of the Affordable Care Act initiatives, it is unlikely that regulations will be released soon.”  However, on January 25, 2015, Congressman Fred Upton (Michigan) and Senator Orrin Hatch (Utah) sent a letter to Marilyn Tavenner, the CMS Administrator, asking why 22 states including California have not implemented the DRA. According to CANHR, CMS and California will have to pay attention to this letter and respond accordingly.  Therefore, we anticipate that the final regulations will eventually be adopted in California. In the meantime, there is still a window of opportunity to implement Medi-Cal estate planning under the much more client friendly MCCA rules. Don't wait until it's too late! The Department of Health Services (DHS) has a very aggressive recovery unit. Without a Living Trust, DHS will go after your home in order to satisfy their claim for the amount of money they paid out.

Medi-Cal Planning & Eligibility

You don't have to lose your home or spend down your money to qualify for Medi-Cal. We can help you protect your home and other assets with a long-term care estate plan designed to facilitate eligibility for Medi-Cal benefits without having to spend down your money or other assets on nursing home care.

Generally, a long-term care estate plan will utilize a Medi-Cal Asset Protection Trust to protect your countable assets from a spend-down in the event you suffer a catastrophic illness or disability. Another aspect of this planning incorporates a gifting strategy together with the creation of a Supplemental Needs Trust to hold your money for your benefit. The Supplemental Needs Trust also will protect your assets from a spend-down and will provide the money you need for those services Medi-Cal will not pay for such as a private room or for a care manager. This is a much better outcome than having to spend down all your money on nursing home care (before Medi-Cal will pay) with no money left over to supplement your care. Also, you cannot rely on social security or other retirement income to supplement your care, because all your income, except for $35 a month, must be used to pay the nursing home. This is called “share of cost.” Thus, the more retirement income you have the greater is your share of cost and the less Medi-Cal will pay.

Beginning January 1, 2017, a Living Trust will now protect your home from a Medi-Cal estate claim. Nevertheless, your Living Trust should include Long-term Health Care Catastrophic Coverage Powers and other provisions to allow your agent under a General Durable Power of Attorney to carry out Medi-Cal estate planning. Also, your General Durable Power of Attorney should include provisions which expressly authorize your agent to carry out Medi-Cal estate planning in the event you are ill or disabled and lack the capacity to carry out the planning yourself.

Contact us for a Free Consultation to learn more about the planning techniques we use to protect your home and other assets from the high cost of nursing care.

THE LAW PRACTICE OF ZARCARO & ASSOCIATES IS LIMITED TO THE STATE OF CALIFORNIA. THE INFORMATION, IDEAS AND SUGGESTIONS CONTAINED HEREIN HAVE BEEN DEVELOPED FROM SOURCES THAT ARE CONSIDERED AND BELIEVED TO BE RELIABLE BUT CANNOT BE GUARANTEED INSOFAR AS THEY APPLY TO ANY PARTICULAR PERSON. NOTHING IN THESE PAGES IS TO BE CONSTRUED AS LEGAL OR FINANCIAL ADVISE. MOREOVER, BECAUSE OF THE TECHNICAL NATURE OF THE MATERIAL AND THE FACT THAT LAWS ARE NEVER STATIC, BUT EVER CHANGING, AT THE VERY LEAST THE ASSISTANCE OF A QUALIFIED LAWYER IS RECOMMENDED WHEN IMPLEMENTING ANY PLANS OR IDEAS DISCUSSED IN THESE PAGES. THE AUTHOR SPECIFICALLY DISCLAIMS ANY LIABILITY, LOSS, OR RISK, PERSONAL OR OTHERWISE, INCURRED AS A CONSEQUENCE DIRECTLY OR INDIRECTLY OF THE USE AND APPLICATION OF ANY OF THE TECHNIQUES OR CONTENTS OF THESE PAGES. ZARCARO & ASSOCIATES, A.P.C.

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