Are you a senior who is suddenly facing the need for long-term care (LTC) for you or a spouse? If so, you are also facing the need to pay for the cost of that care. In the State of California, that means paying an average of $10,000 per month in LTC expenses. Unless you can afford to cover those expenses out of pocket, you will likely find yourself turning to Medi-Cal for assistance. While Medi-Cal does cover LTC expenses, you may find yourself looking at several obstacles to eligibility unless you included Medicaid planning in your estate plan some time ago. To understand the problem, you need to have a better understanding of the rules for Medi-Cal eligibility for seniors.
Long-Term Care Costs
Everyone realizes that long-term care could be needed at some point down the road; however, most people fail to realize just how likely it is that LTC will be needed. When you enter your retirement years (age 65) you stand a 50 percent chance of needing LTC at some point before the end of your life. If you are married, keep in mind that your spouse faces the same odds as you. The longer you both live, the stronger the likelihood that one of you will eventually need LTC. If you are fortunate enough to still be here at age 85, your chances of needing LTC will have increased to 75 percent – and if you do end up needing LTC you will quickly find that the cost of that care is not cheap!
Nationwide the average cost of LTC for 2016 was $80,000 per year or about $6,500 per month. As you may well imagine, the cost of LTC in California is considerably higher than the national average, running about $110,000 per year, or just over $9, 300 on average. Like most seniors, you likely count on Medicare in lieu of, or in addition to, private healthcare coverage to cover the majority of your healthcare expenses. Unfortunately, neither Medicare nor most basic healthcare policies will pay for long-term care expenses. Consequently, about half of all seniors faced with the need to pay for LTC turn to Medicaid for help, because Medicaid (Medi-Cal in California) does cover long-term care costs.
Medi-Cal Eligibility for Seniors
While Medicaid does cover LTC costs, you must first qualify for the program – something that can be problematic for the average senior because of the income and asset limits used by Medicaid when determining eligibility.
Some applicants are automatically qualified for Medi-Cal because of their enrollment in other assistance programs, including:
- CalWorks (AFDC)
- Refugee Assistance
- Foster Care or Adoption Assistance Program
If you are not enrolled in one of those programs, however, you will need to meet Medi-Cal’s eligibility requirements for seniors, meaning you must meet the income and asset tests. The income limit is tied to the Federal Poverty Level and will change depending on which Medi-Cal category you apply under, your geographic location, and household size. The asset limit is where most seniors who failed to plan ahead run into problems. An individual applicant cannot own “countable resources” valued at over $2,000. A married couple faces an asset limit of just $3,000. Medi-Cal does exempt certain assets, such as your primary residence and a vehicle, most seniors have accumulated non-exempt assets valued at over the program limit. If your assets exceed the program limit you will face a waiting period imposed by Medi-Cal during which time you will be expected to “spend-down” your assets. In simple terms, this means you must sell your hard-earned assets and use the funds from the sale to pay for your LTC expenses.
Can Medicaid Planning Help?
The key to protecting your assets from the Medi-Cal spend-down requirement is to include Medicaid planning strategies in your estate plan well ahead of time. If you failed to do this, however, an experienced estate planning attorney may still be able to utilize some last-minute strategies to help you protect some assets. For example, you might be able to turn a non-exempt asset into an exempt asset. The best way to find out what you can do to protect your assets and to set yourself up to qualify for Medi-Cal is to consult with an experienced California estate planning attorney.