A Grain of Truth…but…Mostly Myth
1. Myth:
“I have to give away everything I own to get Medi-Cal.”
The Truth:
Basically, a person is permitted to own some property, and still be eligible for Medi-Cal. The trick comes in knowing what is “countable” and what is “non-countable” under the Medi-Cal rules. For a married couple this includes, for example, the marital home that is occupied by the healthy spouse. Whether you are married or not, certain types of prepaid burial contracts are non-countable. There are many other types of “non-countable property.” The bottom line is, you don’t need to be completely without assets to be Medi-Cal eligible.
2. Myth:
“I can’t give anything away and get Medi-Cal.”
The Truth:
The Medi-Cal rules provide that a person can be disqualified for giving away property, in some cases. But, a lot depends on what is given away, to whom, and when. So, again, it’s complicated. Some asset transfers are not penalized under the Medi-Cal rules. Consult with a lawyer who knows the law.
3. Myth:
” I have to wait 3 years after giving anything away, to get Medi-Cal.”
The Truth:
The disqualification isn’t always 3 years long and sometimes there is no disqualification at all. True, there is a 30 month “lookback” (not 3-years) for some asset transfers under the Medi-Cal rules. This means that the Medi-Cal agency will look back at all transfers of property, including sales for less then market value. For some transfers, the “lookback” actually goes back five years. (Irrevocable Trust). However, the rules penalizing transfers do not apply to all transfers. See #2 above.
4. Myth:
“I can keep all our marital property and my inherited property when my spouse gets Medi-Cal.”
The Truth:
When a married person applies foe Medi-Cal, assets in either or both spouse’s name are considered by the Medi-Cal agency. However, some assets won’t be “countable” and you may keep some as an asset allowance if your spouse enters a nursing home . See #1 above.
5. Myth:
“If I put my property into my spouse’s name, I will be eligible for Medi-Cal.”
The Truth:
Assets are counted, regardless of which spouse’s name they are in. However, the healthy spouse will be given several months to re-title assets from the name of the spouse in the nursing home, into the name of the healthy spouse. The Medi-Cal agency explain these rules when the sick spouse get into the Medi-Cal program.
6. Myth:
“Medicare will cover my nursing home bill.”
The Truth:
Medicare only covers small amount of nursing home care provided in this country. Many older people are surprised to learn this. In general, there are 20 days of full coverage if you go into the nursing home after at least three days in the hospital, and are getting skilled care (rehabilitation). Then, if you still need skilled care, you can get up to 80 days of partial coverage from Medicare. After that, you will either pay out-of-pocket, or get Medi-Cal, unless you have private long-term care insurance.
7. Myth:
“If I enter a nursing home as a private pay resident, I must use up my assets before I can get Medi-Cal.”
The Truth:
You are not required to use your assets to private pay for the nursing home care. However, some nursing homes might try to make you believe that you do have to do this. They are paid less under the Medi-Cal program then they collect from private pay patients. Some people seek advice from an elder law attorney to find out how they can become Medi-Cal eligible before having spent a significant part of their assets on the private pay rate.
8. Myth:
“I can only ‘spend-down’ my assets on medical or nursing home bills.”
The Truth:
See #7 above. Nursing homes may tell you that you have to spend your savings on the private pay rate, before applying for Medi-Cal, but this is not true. In fact, it’s against the law for them to tell you this!
9. Myth:
“My power-of-attorney automatically has the power to take property out of my name, if I ever need Medi-Cal.”
The Truth:
Your best tool to be able to plan for Medi-Cal eligibility, should you ever need it, is to sign a general, durable power of attorney that includes a “gifting and asset protection” power. Your agent under the power of attorney will only be able to re-title your assets if your power of attorney contains a “power to make gifts and protect your assets”. Most powers of attorney don’t contain this, so you might want to ask your attorney to add it.
The court procedures to transfer assets without a “gifting and asset protection power ” can be expensive and time-consuming, and may not allow the type of asset protection that many people would like to accomplish.
Without a “gifting and asset protection power” your agent is generally limited to spending your money on your bills and selling your assets to generate cash, to pay your bills. A “gifting and asset protection power” is recommended for people who want to become eligible for Medi-Cal and not be limited to the “non-countable” assets allowed under that program.
Some powers of attorney contain only a general ” gifting” provision, but it’s limited to $13,000 IRS gift per person per year. This figure is too limited to do effective Medi-Cal planning, and is related to a completely different type of legal issue (See #11 below, about the federal estate tax).
One more word about the “gifting and asset protection power”. You should require your agent under your power of attorney to consult with an attorney experienced in Medi-Cal law before making any asset transfers.
10. Myth:
“All property transfers will cause me to be disqualified from Medi-Cal.”
The Truth:
Not all transfers of property will cause a person to become ineligible for Medi-Cal. See #2.
11. Myth:
“I can only give away $13,000 per person per year under Medi-Cal rules.”
The Truth:
This is a rule under federal estate and gift tax law, not under Medi-Cal law. In 2022, this tax law only applies to people who have over about $12 million in assets. People who would pay federal estate tax should not worry about getting Medi-Cal anyway. In fact, if more millionaires paid federal estate tax, we could cover the costs of nursing home care for the rest of us!
12. Myth:
“My income may have to be used to pay my spouse’s nursing home bill.”
The Truth:
This is not true in California or the majority of other state (name on the check rule).
13. Myth:
“All of my spouse’s income must be used to pay the bill if my spouse is on Medi-Cal in a nursing home.”
The Truth:
The law allows you to keep a portion of your spouse’s income if your income is below certain limits (MMMNA, minimum monthly maintenance needs allowance, for 2023 it is $3,715.50). In addition to this allowance, you may be entitled to a greater allowance if the cost of maintaining your home exceeds a certain amount AND if a state hearing officer or a judge orders a greater allowance.
In addition, the Community Spouse Resource Allowance (CSRA), for a couple for the year 2023 is $195,000.00.
14. Myth:
“I can hide my assets and get eligible for Medi-Cal.”
The Truth:
Intentional misrepresentation in a Medi-Cal application is a crime and can be costly. The IRS and The Franchise Tax Board shares any information concerning income or assets you have with the county department of social services. You or whoever applied may have to pay Medi-Cal back to avoid prosecution for fraudulent conversion of income and/or assets.
15. Myth:
“Medi-Cal rules that applied to my neighbor when he went in a nursing home will also apply to me.”
The Truth:
Medi-Cal rules change, so don’t count on the law that applied to your neighbor still applying to you. Also, there may have been facts about your neighbor’s situation that you just don’t know, or, is different from your particular circumstances. It’s best to have your situation analyzed by a competent elder law attorney.