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Copyright 1996, Marc S. Weissman
Certified Specialist: Estate Planning, Trust and Probate Law
Certified by the California Board of Legal Specialization of The State Bar of California
Weiss & Weissman, San Francisco, California
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Medi-Cal Planning after 1996

This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.

MEDI-CAL CHANGES

Medi-Cal is the California version of Medicaid. As it is a Federally funded, State implemented, program, both State and Federal law apply.

Unlike Medicare (for senior citizens regardless of need), Medi-Cal is need based: only low income, low asset applicants are eligible.

Medicare does not cover long-term nursing home care. Medi-Cal does, if the applicant meets the income and asset requirements.

Some assets are exempt and disregarded in determining eligibility. A home is an exempt asset, as are certain other specified assets.

If "non-exempt assets" exceed approximately $65,000 for a married couple or $2,000 for a single person, the applicant is ineligible for Medi-Cal until he:

  1. Spends down to the allowed limits;
  2. Converts his assets to exempt assets; or
  3. Gives away and waits for his period of ineligibilty to expire.

Assets may be converted from non-exempt to exempt. If an applicant has $1 million in the bank (a non-exempt asset) he is ineligible. If he uses that money to pay off his home mortgage or improve his home, since the home is exempt, he has successfully converted his assets and may now be eligible for Medi-Cal.

OLD LAW - PRE-1997:

Is this moral? Morality is not our concern; morality is up to each individual client. Is it legal? At least until 1996! Now, in 1997? There are changes!

Is giving away assets to create Medi-Cal eligibility a good idea? Not in my personal opinion. There are several issues: (1) giving up control to your children; and (2) access to desirable nursing homes.

  1. Why give up control now, if you might never need long-term care? I regularly advise clients that they should not give away their assets now IF they might later need to go on Medi- Cal. It is better to wait until the need is definite, and then carefully consider the risks.

    Risks:
    Your utterly reliable child to whom you gave your life savings turns out to be not so trustworthy: he spends your money or refuses to support you in the style you desire. Clients tell me constantly: "But that would NEVER happen with your children!!!"

    Even so, your child, whom you trust "til death do you part:"

  2. Nursing homes charge about $4,200 per month from private pay residents; Medi-Cal pays about $2,400 for the same services. If one applicant is on Medi-Cal and the next is not, which applicant will get the one available spot? Having money means that you get into the nursing home of your choice.

Instead, giving assets away when nursing home care becomes a certainty (rather than a possibility) makes more sense, other than the fact that it will cost you $100,000 for the 36 months period of ineligibility.

NEW 1997 MEDI-CAL LAW

A rider to the Health Insurance Portability Bill makes this kind of Medi-Cal planning illegal and criminal. Since this is a brand new law, we are not certain of its boundaries. It appears that giving away exempt assets remains legal. It appears that giving away any assets in 1996 is legal. It appears that giving away non- exempt assets in 1997 will be criminal, subjecting the recipient of those assets, as well as those who assisted in the transfer, to criminal liability.

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