Medi-Cal Benefits for Long-Term CareBy Tamara Polley
The article Long Term Care Cost that Jim wrote outlined Medi-Cal benefits for long-term skilled nursing care. To receive these benefits, an applicant must have limited resources. What if you have too much money to qualify, but not enough to pay for the high cost of long-term care? Well, for a limited time, you may be able to transfer assets and still qualify for Medi-Cal.
When you fill out an application for long-term care Medi-Cal benefits, you will be asked whether you have given any assets away in the last 30 months. If so, there may be a penalty resulting from the gift, depending on answers to the questions below:
What was given away? There is no penalty for giving away your home or car. So if you give your only car to your son because you no longer drive, and he uses it to take you to the doctor, that gift will not result in any penalty. But if you have a car that you still use, and deed that car to your son, a penalty may result.
What was the value of the gift? Medi-Cal will only impose a penalty if the value of the gift exceeds $5,698. This number is adjusted every year for inflation, and is considered the “average private pay rate” for long-term care. If the car you gave is a broken-down clunker, it probably has little value and will not result in a penalty. But if the vehicle has value, then a penalty will be imposed.
What is the penalty? A period of ineligibility results from the transfer: one month for every $5,698 transferred. So if the vehicle is worth $30,000, the transfer will mean five months of ineligibility for Medi-Cal long-term care benefits.
When was the transfer made? The ineligibility period runs from the asset transfer date. So if you gave the car to your son more than five months ago, you will need to wait until the five-month period expires before applying – unless you can prove the transfer was made for a purpose other than qualifying for Medi-Cal.
As stated earlier, gifts valued at less than $5,698 do not result in a Medi-Cal penalty, and because gifts are not cumulative, you can make consecutive transfers of $5,698 on different days and those gifts will not be added together – even if made to the same person. So if you have $30,000 in a bank account, and transfer $5,000 a day on six consecutive days, there will be no ineligibility period. Making a single transfer, however, would result in five months of ineligibility.
Beware: Change is in the air
The option of incrementally giving away assets to qualify for Medi-Cal is only available for a limited time. The Deficit Reduction Act of 2005 made significant changes in Medi-Cal rules. These changes will not be enforced until the California Department of Health Care Services enacts regulations implementing the changes, expected in late 2010. The changes include:
- The “look back” period for transfers will increase from 30 months to 60 months
- Incremental gifts will be cumulative (so consecutive small gifts will be added together)
- The period of ineligibility resulting from a gift will run from the date that the application for Medi-Cal is made, rather than from the date of the gift, unless the applicant can establish that the gift was made for a purpose other than qualifying for Medi-Cal
- Partial months will be included in calculating the period of ineligibility
The bottom line? These new rules will make it more difficult to transfer assets and still qualify for long-term Medi-Cal benefits. So if you or your spouse need 24-hour skilled nursing care, or soon will, and you anticipate needing long-term care Medi-Cal benefits, consider taking steps to qualify for Medi-Cal now rather than delaying.