The population of the state of California is growing, and this phenomenon is very eye-catching when you apply it to senior citizens. According to the California state government, the Los Angeles senior population is exploding. By 2020, the elder population should be 50 percent more than it was in 1990 according to government research.
Since so many people are reaching retirement age, questions are being asked about Medicare and Medi-Cal. Let’s look at some very important information that can be helpful when you are devising your retirement plan.
Health Insurance
Medicare and Medi-Cal are both government-run health insurance programs. There are some similarities between the programs, but there are also some significant differences that you should be aware of when you are budgeting for your golden years.
Age of Eligibility
There are limited exceptions to this rule, but for the most part, Medicare is in place to provide health care for senior citizens. If you qualify, you obtain coverage when you reach the age of 65 under currently existing laws.
On the other hand, Medi-Cal is potentially available to people of all ages. There are seniors who are enrolled in the Medi-Cal program, but it is not exclusively for senior citizens.
Financial Need
The question of financial need is another difference between Medicare and Medi-Cal.
You obtain Medicare coverage through the accumulation of retirement credits. In 2016, you get one credit for every $1260 that you earn. You can accrue up to four credits per year. Once you have a total of 40 credits, you will qualify for Medicare when you reach the age of eligibility.
Medicare coverage has nothing to do with financial need. You could be rich or poor, but you will qualify for Medicare at the age of 65 if you have accumulated at least 40 retirement credits.
Medi-Cal is a need-based program. Eligibility is not dependent upon the accumulation of retirement credits. If you can demonstrate significant financial need, you may be able to qualify for Medi-Cal coverage.
Long-Term Care
From an elder law perspective, there is a huge difference between Medicare and Medi-Cal.
The Medicare program will pay for up to 100 days of convalescent care after surgery, but it will not help with custodial care costs. Custodial care is the type of care that you would receive if you need assistance with your activities of daily living.
Nursing homes and assisted living communities are extremely expensive, and most elders will eventually need long-term care. According to the United States Department of Health and Human Services, seven out of 10 people who are turning 65 will eventually need living assistance.
As we have stated, we practice law in the state of California. The average annual cost for long-term care is going to vary depending on the county. Here in Los Angeles County, you are looking at an average of right around $100,000 a year for a private room. Approximately10 percent of nursing home residents stay in the facilities for at least five years.
As you can see, long-term care costs are considerable, and most people cannot pay comfortably out-of-pocket.
Medi-Cal will pay for long-term care. Because it is a program that is only available to people who can prove that they have financial need, there are income and asset limits.
The asset limit for an individual is just $2000, but there are things that you own that do not count toward this figure. Non-countable assets would include your home, one vehicle, wedding rings, engagement rings and heirloom jewelry, personal effects, and household items.
People who were never financially needy sometimes qualify for Medi-Cal by giving away assets before they apply for coverage. They essentially give their loved ones inheritances in advance. This is called a Medi-Cal spend down.
You have to act well in advance if you want to spend down, because there is a 30 month look-back. Your eligibility is delayed if program evaluators find that you have given away assets within five years of applying for Medi-Cal coverage.
The length of the delay would depend upon the amount of the divestitures. For example, let’s say the government determines that the average annual cost for nursing home care is $100,000 per year. You gave your children $200,000 within this 30 month time frame. This amount of money would have paid for two years of nursing home care, so your eligibility would be delayed by two years.
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