WHAT IS MEDI-CAL?
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.
MEDI-CAL RULES AND REGULATIONS
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.
OBRA’93
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 2025 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
As of April 2024, Medi-Cal no longer asks how much “assets” one has to qualify for long-term nursing home care (see discussion regarding recovery against the assets upon death). This means you don’t have to transfer any assets to protect them as a part of your strategy to apply for Medi-Cal long-term care nursing home benefits. Medi-Cal will still do a 3 year look-back on any “gift transfers” that occurred before January 1, 2024. Discuss this issue with your elder law attorney before applying for Medi-Cal long-term care benefits.
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 $3,948.00 per month as the MMMNA for the year 2025 (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’s “Share of Cost” or in excess of what the Court allows the at-home spouse to keep of the couple’s income.
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 needs and sufficient funds 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 (see discussion above).
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 their 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 that can be recovered against is either assets that are being probated (i.e., the applicant either has a Will or no estate planning documents at all) or assets held in the name of the applicant only, and not in a probate avoidance device such as a Trust.
With proper planning, Medi-Cal will not be able to make a claim against the recipient’s estate, especially if the estate is “properly” funded into a Revocable Trust.
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. Assets placed and properly funded into a revocable trust are considered exempt from recovery by Medi-Cal upon the passing of the recipient of Medi-Cal long-term care benefits.