Elder Law, Medi-Cal Planning, Estate Planning - Law Offices of James T. Kennedy San Francisco, Bay Area
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2447 Santa Clara Avenue, Suite 202
Alameda, California, 94501
(510) 522-3235

URGENT NOTE: Because of the adoption of the Deficit Reduction Act on February 8, 2006, much of the information below relating to Medi-Cal and in the article on California’s Medi-Cal Program attached to this page is now outdated. DO NOT rely on anything on this page or the attached article to take action. Call Jim Kennedy at (510) 522-3235 or an Elder Law attorney in your immediate area.

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Summary of California's Medi-Cal Program

  1. Medi-Cal (California's Medicaid) is the only federal and state program designed to cover skilled nursing care at convalescent homes. It is not related to Medicare except that Medicare does pay, after hospitalization, for all skilled nursing care for 20 days and a gradually reducing amount for the 21st to 100th days.

  2. Historical Background

    1. In the early to mid-1980's, Medi-Cal laws required the exhaustion of virtually all non-exempt assets by a married couple before an ill spouse could qualify for Medi-Cal benefits. As a consequence of this "spending down" requirement, couples married for years were required to obtain divorces, thereby dividing their property in half in order to keep one-half of the couple's property for the well spouse for his or her needs.

    2. In the late 1980's, the Medi-Cal laws were changed to eliminate the need for a divorce by allowing the equal division of a couple's property without divorce.

    3. In 1993, as a result of the belief by some that the Medi-Cal (Medicaid) laws were being abused by well-to-do couples through transfers of assets and other techniques, the Federal Medicaid laws were changed again to limit the amount of non-exempt assets which the well spouse could retain by establishing among other controls a limited community spouse resource allowance ("CSRA"). The CSRA increases each year for inflation and is presently $90,660.00. While this level is adequate in states where the cost of living is low, in California it often represents a substantial reduction of income and hardship.

    4. In this age of Congressional cost cutting, deficits, and reductions in spending, there will be further reductions and restrictions on benefits.

  3. Present Medi-Cal System

    1. Qualification - there are two tests to qualify for Medi-Cal:

      1. Assets Test - must first determine what assets are exempt and non-exempt. Exempt assets are not considered in determining qualification. Non-exempt assets must be transferred, converted to exempt assets or otherwise made available to the well spouse.

        1. Exempt Assets (not considered for qualification for Medi-Cal):

          • Home
          • Jewelry
          • Household goods and personal effects
          • Automobile
          • $2,000.00 cash
          • Insurance (policies with total face value up to $1500.00 are exempt)
          • Term insurance (completely exempt)
          • Prepaid burial plan
          • Burial plot for applicant and immediate family

        2. Non-exempt assets:

          • Cash in excess of $2,000.00
          • Stocks
          • Bonds
          • Other non-exempt assets

      2. Income test - the well spouse is entitled to retain a monthly maintenance needs allowance ("MMNA") of $2,266.50 per month. This amount is adjusted annually by a cost of living increase. Income of the couple above this amount is generally used to pay a share of the monthly cost of skilled nursing care ($4500.00 plus), but there are a few ways to increase the monthly amount.

    2. Further Planning Opportunities

      1. Annuities - are sometimes used to convert non-exempt assets to income in a well spouse's name only.
      2. Increasing community spouse resource allowance (CSRA).
      3. Transfers of assets before application for Medi-Cal (for example, gifts to children).

  4. Single Person Eligibility.

  5. For a single person such as a surviving spouse, qualification is more difficult because there is no community spouse resource allowance and planning opportunities are fewer.

  6. Conclusion

  7. Medi-Cal planning is complex and rapidly changing so that all such planning must be made with the idea that planning which is presently effective may not be effective in the future due to changes in the Medi-Cal laws. It is also important to recognize that such planning is usually done when the need for convalescent care is imminent or probable.

    Finally, the information contained in this letter and its attachments is a very general summary of current Medi-Cal planning and must not be relied upon to make decisions on your own. Such decisions must be made only after consultation with a competent Elder Law attorney.
    Member of the National Academy of Elder Law Attorneys
More Information

California Medi-Cal

California Advocates for Nursing Home Reform
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