Berge & Berge, LLP Blog

Wednesday, December 13, 2017

Crisis Planning for MediCal Asset Protection

As we age, most people’s medical expenses tend to increase, and if it becomes necessary to enter a nursing home or similar facility the costs can potentially bankrupt a family.  Although it’s best to be prepared by having plans in advance to protect your assets in case residential care becomes necessary, life doesn’t always work out that way and sometimes the need to enter a nursing home surprises us.  But when that happens, it’s critical to immediately begin putting together a “crisis plan” to protect financial assets from being drained by the cost of care. An experienced estate planning lawyer can be invaluable in helping put together a crisis plan.

What is MediCal, and why do I need asset protection?

MediCal is California’s Medicaid program, providing financial assistance for medical expenses to seniors and low-income families (among other groups).  However, establishing eligibility for MediCal can be notoriously difficult, in part because California expects patients to contribute as much financially to their own care as they are able.  That much is reasonable, but California’s policies consider much of a person’s wealth available to finance their care, even if the practical consequences of using that wealth are dramatic and harsh.

How is MediCal eligibility established for nursing home patients?

Assets and income are two primary factors MediCal considers when assessing nursing home patients’ financial resources.  Your assets are subdivided into two categories: “countable” assets, or the wealth you have that California expects you to spend on health care, and “exempt” assets, or wealth that California does not consider available to cover health care costs.  Examples of exempt assets include homes, personal property, and funeral funds.  When applying for MediCal, the total value of your countable assets will be determined, and to be eligible that value must be less than the MediCal asset limit.

The problem comes from California’s limits.  For example, single individuals who live in a nursing home are only eligible for MediCal if their countable assets total less than $2,000.  But MediCal only allows nursing home patients to consider their home to be an exempt asset if they plan to return to that home to live there; otherwise the value of the home will be counted and will certainly put the patient’s assets well in excess of $2,000.  Additionally, MediCal only allows nursing home patients to exempt up to $100 total in clothing, heirlooms, and jewelry; the value of everything beyond that will be counted against the $2,000 limit.  Even life insurance policies are counted if their value exceeds $1,500, so a policy worth $3,501 would by itself put a person over the $2,000 limit by $1.  Similarly, MediCal recipients in nursing homes are only allowed to earn $60 per month in income; anything beyond that must be paid to the nursing home to cover costs.

What should I do if I am unexpectedly placed in a nursing home?

Crisis planning for unexpected nursing home placements should be done with the help of an experienced attorney.  Federal law allows MediCal officials to look back at your financial transactions over a five-year period, and there can be steep penalties if they determine you’ve improperly transferred assets in order to become eligible for MediCal benefits, including being made ineligible for MediCal for up to 30 months.  

There are legal ways to protect your family’s wealth and still be eligible to receive MediCal benefits, but they require careful and precise planning.  Our firm focuses on helping families make both advance and crisis plans for MediCal eligibility, and our attorneys have helped hundreds of clients in nursing homes successfully protect their family’s possessions while also collecting the benefits to which they are entitled.  If you have questions about MediCal crisis planning and need to speak with an attorney, contact the Law Offices of Berge & Berge today.


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