Qualifying for Medi-Cal Long-Term Care Without Affecting Your Heirs

Long-term care costs can be daunting, and many families struggle to meet the financial burden. In California, the Medi-Cal program provides financial assistance for long-term care. However, qualifying for aid can be complicated, especially if you’re trying to preserve assets to leave for your loved ones. This blog post explores strategies for qualifying for long-term care Medi-Cal without affecting your heirs’ inheritance.

1. Understand Medi-Cal Eligibility Requirements

Applicants must meet specific requirements to be eligible for long-term care Medi-Cal in California. Currently, the asset limit for a single individual applying for institutional or nursing-home Medi-Cal is $130,000. For a married couple with one spouse applying, the income limit is $130,000 for the applicant and $148,620 for the non-applicant.[1]

The limits may differ if you seek assistance under other Medi-Cal long-term care categories: Medicaid Waivers/Home and Community Based Services (HCBS) or Regular Medicaid/Aged, Blind, and Disabled. In addition, these two categories have income limits that are important to understand. Please check this American Council on Aging webpage for Medi-Cal eligibility specifics.

It is essential to understand your eligibility requirements before implementing any financial or estate strategies. Mistakes can hurt your eligibility for assistance, incur penalties, and reduce the inheritance you’d like to leave.

2. Utilize an Irrevocable Trust

Establishing an irrevocable trust can be one of the most effective ways to protect your assets and qualify for Medi-Cal. An irrevocable trust allows you to transfer ownership of your assets to the trust, effectively removing them from your estate. As a result, these assets should not count toward the Medi-Cal eligibility requirements.

However, it is essential to note that California has a 30-month look-back period for transferring assets into an irrevocable trust. Any assets transferred within 30 months of applying for Medi-Cal may be considered part of your estate, penalties may be imposed, and eligibility may be postponed.

3. Use a Community Spouse Resource Allowance (CSRA)

For married couples, California law allows the community spouse (the spouse not applying for Medi-Cal) to retain a certain amount of assets without affecting the applicant’s eligibility. This is known as the Community Spouse Resource Allowance (CSRA). The CSRA can protect a portion of the couple’s assets while still allowing one spouse to qualify for Medi-Cal.

When eligible, the 2023 maximum CSRA amount is $148,620. Couples can take advantage of the CSRA by transferring assets from the applicant’s name to the community spouse’s name, thus reducing the applicant’s countable assets for eligibility purposes.

4. Implement a Gifting Strategy

Gifting assets to family members or loved ones could effectively reduce your estate’s value so that you qualify for Medi-Cal. However, it is essential to remember the 30-month look-back period for asset transfers. Gifts made within this time frame can result in penalties and a period of ineligibility for Medi-Cal.

To implement a successful gifting strategy, work with an experienced financial advisor or attorney to help ensure you adhere to Medi-Cal rules.

5. Plan for Medi-Cal Estate Recovery

While qualifying for Medi-Cal may help cover the costs of long-term care, the state can attempt to recover these funds from your estate after your death. This process, known as estate recovery, can impact the inheritance left for your heirs. To protect your legacy, you will want to plan for estate recovery.

For example, you might consider transferring the ownership of your home to a family member, effectively removing it from your estate. This transfer must occur outside of the 30-month look-back period. Another option is to hold your home in an irrevocable trust, which may also protect it from estate recovery.

 However, each option has its pros and cons, and it is a good idea to consult with professionals experienced in Medi-Cal regulations to help determine the best course of action for your situation.

Conclusion

Protecting your legacy while qualifying for long-term care Medi-Cal is a delicate balancing act, but it can be achievable with the right strategies. It can be a good idea to work with an experienced attorney to guide you through this complex process and a fiduciary financial advisor to help you plan for long-term care and legacy in light of your overall financial goals. Taking proactive steps now can help create a more secure future for you and your loved ones.

Schedule a complimentary, 15-minute chat with a fee-only, fiduciary financial advisor today to discuss your personal situation.

This material was generated using artificial intelligence (ChatGPT) and edited by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.

Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor with offices in Roseville and Folsom, CA, and Lehi and Logan, UT. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.

[1] American Council on Aging, “California Medicaid (Medi-Cal) Income & Asset Limits for Nursing Homes & Long Term Care,” last updated 15 March 2023, https://www.medicaidplanningassistance.org/medicaid-eligibility-california/.