Do you know how to protect your home and assets and still qualify for Medi-Cal long-term care benefits?

Medi-Cal Overview


Medi-Cal is California’s Medicaid program, which is funded by both federal and state funds. Medi-Cal has two divisions. One which provides regular medical care for the poor and the other division was created to assist senior citizens with nursing home costs. Social Security, Medicare and Medi-Cal are federal entitlement programs. Social Security and Medicare are non-means tested entitlement programs which senior citizens qualify for by attaining age 65 or older.

To receive Medi-Cal benefits the applicant and spouse’s assets or resources must be within the Medi-Cal guidelines. If assets exceed the Medi-Cal resource limit the excess resources must be “Spent-Down” on nursing home costs, or, otherwise legally protected until they are depleted down to the qualifying limits. Assets are divided into three categories, exempt assets (assets that do not count), countable assets (assets that are subject to spend down) and unavailable assets (assets that can not be converted to cash and spent on nursing home costs).


Medical Necessity

Medical necessity is the prerequisite for participation in the Medi-Cal (Medicaid Title XIX) long term care program. Medical necessity is the determination that a recipient requires the services of a licensed nurse. The applicant must demonstrate a medical disorder or disease or both that:

Are ordered by and remain under the supervision of a physician;

Are dependant upon the individual’s documented medical, physical, and/or functional disorders, conditions, or impairments;

Require the skills of a registered or licensed vocational nurse;

Are provided either directly by or under the supervision of licensed nurses in an institutional setting; and

Are required on a regular basis.


Omnibus Budget Reconciliation Act of 1993 was passed by the United States Congress and among other things addressed Medicaid Recovery (Medi-Cal for California), Medicaid Trust rules and the rules controlling annuities that convert assets from available or countable to unavailable or exempt. California has not adopted all of the OBRA ’93 rules as of 2015 and still rely on various “draft regulations” and departmental letters to determine how California deals with estate recovery, trust rules and what are exempt versus non-exempt assets (these draft regulations are subject to change every year).

Assets Transfers

Prior to applying for Medi-Cal assets may be converted from countable to unavailable or exempt to assist in Medi-Cal qualification. If transfers for less than fair value are made to another person (30 month look-back) or an irrevocable trust (60 month look-back) within thirty or sixty months prior to applying for Medi-Cal, a disqualification period will be established.

California is one of the few states that permits the gifting or transfer of exempt assets after qualifying for Medi-Cal benefits.

NOTE: Although Medi-Cal does “look-back” into past asset transfers, the applicant will not lose eligibility if the transfers (gifting of assets) were done properlyeven during this look-back period (be sure to discuss your rights with an Elder Law Attorney of your choice).

Share of Cost Determination

After the CSRA (Community or at home spouse asset allocation) and the MMMNA (Minimum Monthly Maintenance Needs Allowance, or, amount of income spouse in facility is allowed to keep) has been established, Medi-Cal then calculates the applicants “Share of Cost”. The community spouse is allowed to keep the first $2,980.50 per month as the MMMNA for the year 2015 (this amount is adjusted annually and can be increased by filing a 3100 petition in Court). Once the applicant has qualified for Medi-Cal benefits, the community spouse is no longer required to pay nursing home expenses in excess of the applicant “Share of Cost”.

For a single person, the Share of Cost is calculated by taking all of the applicant’s income (not assets) required to be paid to the Nursing Home for board and care. The applicant is allowed to keep $35.00 for personal need and sufficient fund to pay for their insurance premium (they are also allowed to keep and pay for the prior medical HMO or private medical plan if so desired).

Spousal Support Order & Fair Hearing

A Spousal Support order for more income and/or assets can be produced by a Superior Court. For Medi-Cal planning purposes, it is used to increase the MMMNA above the federal guidelines.

A request to increase the assets only can be produced by requesting a Fair Hearing with an administrative law judge, to avoid the cost and delay of filing a petition in superior court.

Name On the Check Rule

Medi-Cal designates income by whose name is on the check. If the check is payable to the Medi-Cal recipient then the income will become part of his or her “Share of Cost”. If the check is payable to the Community Spouse then the income is retained by the spouse and is not used to pay the LTC expenses of the ill spouse. In other words, if the at home spouse has $3,500 (for example only) of income in there name only (i.e., Social Security, Retirement or other Pensions), then they are allowed to keep it all and the Share of Cost will only come from the income of the applicant.

Estate Recovery

The federal government under OBRA’93 mandated that upon the death of the Medicaid (Medi-Cal in California) recipient that the States recover the cost of Medi-Cal benefits paid on behalf of the Medi-Cal recipient.

Currently the definition of an estate is either assets that are being probated (i.e., the applicant either has a Will or no estate planning documents at all) or assets within a Revocable Living Trust.

With proper planning the Medi-Cal recipient’s estate should only have the $2,000.00 of allowed exempt assets, because all other assets were properly and timely transferred to their beneficiaries during the Medi-Cal look-back or qualification period.

Revocable Trust

A revocable trust is sometimes referred to as a “Living Trust” or “Inter Vivos” trust. Such a trust is created during the life of the donor rather than through a will. With a revocable trust, the donor maintains complete control over the trust and may amend, revoke, or terminate the trust at any time. Generally this type of trust is created principally to avoid probate and to create a testamentary trust referred to as a “Credit Shelter Trust” to reduce estate settlement costs and reduce estate taxes. Assets placed in a revocable trust are considered available and possibly non-exempt by Medi-Cal.