Q. In talking with friends, I discovered a lot of misunderstanding about how the Medi-Cal program works if one needs help with the high cost of nursing home care. I wonder if you would clarify matters.
A. Sure. I have also discovered much misunderstanding, even among care professionals. Here are the most common “myths” regarding the Medi-Cal program for those needing help with the cost of care:
Myth #1: Nursing home Medi-Cal is just for persons at or near the poverty level.
Fact: Not necessarily. Persons with substantial assets can often qualify for a Medi-Cal subsidy, providing planning is in place and that proper steps are taken at the time of need. This is especially true in the case of married couples, where both federal and state law include Spousal Impoverishment provisions designed to subsidize the cost of care for the Ill Spouse, while preserving a “nest egg” of income and marital resources for the At Home spouse.
Myth #2: The state can force you to sell your home in order to qualify for a nursing home Medi-Cal subsidy.
Fact: False. Your home is an exempt asset during your lifetime and the state will not force you to sell your home in order to qualify for a Medi-Cal nursing home subsidy. However, the home exemption usually expires on death (or upon the later death of the surviving spouse or disabled child), and Medi-Cal may then seek to recover benefits paid out on your behalf, often by placing a lien on the home. Good news: By taking appropriate steps during your lifetime, you can fully protect your home from a post-death Medi-Cal payback claim. One option is to place the home in a Living Trust.
Myth #3: If you give all of your savings to your children, you can immediately qualify for Medi-Cal.
Fact: False. Medi-Cal has a “look back” period, which is currently 30 months in California, and which will ultimately be extended to 5 years. Significant gifts made within that “look back” will usually result in a period of disqualification. However, if gifts are handled in a very special way, they can still be made in a manner which is both compliant with the Medi-Cal rules and which will not result in disqualification. However, to avoid running afoul of the gifting rules proper guidance from an Elder Law attorney is essential.
Myth #4: If you put all of your assets into a Living Trust, they do not count when applying for a Medi-Cal subsidy.
Fact: False. Placing assets into a Living Trust does not shield them from being considered at qualification, as you normally retain the right to revoke the trust. The Living Trust is therefore disregarded when Medi-Cal considers your resources. However, it can shield those same assets from post-death Medi-Cal “recovery” claims (“pay-back”), and hence is often a recommended option for Medi-Cal beneficiaries.
Myth #5: If you convert from private pay to Medi-Cal, the nursing home can ask you to leave.
Fact: False. If the nursing home is Medi-Cal certified, it is illegal to evict you when you seek a Medi-Cal subsidy.
Myth #6: Medi-Cal planning is illegal or unethical.
Fact: False. Medi-Cal planning is perfectly legal and ethical. In our view, it is akin to tax planning in which the wealthy engage. Both types of planning do impact the public treasury. To be sure, tax avoidance planning has a far greater impact than Medi-Cal planning.