Millions of California seniors rely on Medi-Cal (California Medicaid) benefits for their health care needs. Medi-Cal provides essential health care coverage at no charge to qualifying recipients. However, the program is asset-tested, meaning that recipients can only have a small amount of income and resources. Further, after a Medi-Cal recipient dies, the state may take some of their assets. For many Californians, their most valuable asset is their home and its equity. So, if you or your loved one needs Medi-Cal and owns a home, you will want to know: Can Medi-Cal take my home equity?
In California, nursing home care costs an average of $8,000 per month. So if you or a loved one need long-term skilled nursing services, you may be wondering how anyone can afford this type of care.
Essentially, there are three options to pay for these critical long-term care services:
Long-term care insurance is very expensive and often costs too much to maintain. Further, most people can’t afford to pay several thousands of dollars a month out-of-pocket for nursing home care. Medi-Cal, on the other hand, does not cost anything. Therefore, Medi-Cal coverage is crucial when someone doesn’t have long-term care insurance or extensive funds and needs skilled nursing services.
Like many Californians, you may have assets such as a home, bank account, retirement, and a personal vehicle. Currently, seniors who need to qualify for Medi-Cal have to meet a highly restrictive Medi-Cal asset test. However, the state is in the process of phasing out Medi-Cal’s asset limits, and the program requirements will be changing.
For now, those who need Medi-Cal may still be subject to its complex and highly restrictive asset rules. Therefore, those looking to qualify for Medi-Cal need to be aware of the income and asset limitations and how they will impact their program eligibility.
Currently, (2022) Medi-Cal limits seniors and people with disabilities to having assets valued at no more than $2,000 for individuals and $3,000 for couples. Restricted Medi-Cal assets include money, a second vehicle, and other resources and valuables. In addition, as of 2021, seniors are also restricted to earning no more than $1,482 per month for a single adult or $2,004 for a couple.
Not all of a Medi-Cal recipients’ resources will count against their program eligibility. Certain property and assets are considered not countable by Medi-Cal. Property that is not counted in determining Medi-Cal eligibility is called “exempt” or “unavailable” property. Non-exempt or countable property must not exceed the program’s limit. Any amount over the program’s limit can make a recipient ineligible for Medi-Cal.
Your principal residence means the property used as your home. Your principal home will remain exempt even if you have to leave to receive care, as long as you plan to return to it and use it as your primary residence. Your primary residence will also be exempt if your spouse or dependent continues to live in the home.
If you plan on selling your principal residence, the money received from the sale of the home can be exempt for six months, provided the funds are to be used to purchase another home.
Unlike some other states, California does not have a maximum home equity interest limit for Medi-Cal recipients. This means that a California Medi-Cal recipient’s equity in their primary residence can be any amount.
Although your home may be “exempt” for Medi-Cal eligibility purposes, it may not be exempt from Medi-Cal estate recovery. This means that if your home is subject to probate when you die, the state may be entitled to make a claim against your estate to be repaid for your Medi-Cal benefits.
Medi-Cal can be essential. However, the program has complex rules that are constantly changing. Additionally, you need to plan for your Medi-Cal eligibility before it becomes necessary. However, Medi-Cal is just one part of a comprehensive estate planning strategy that you need to protect your assets and prepare for the future.
Contact an experienced Medi-Cal planning attorney today. Your estate planning and Medi-Cal attorney can explain the Medi-Cal program requirements, help you plan for eligibility, and assist you with your California estate plan.
At the Law Offices of Alice A. Salvo, we are experienced California estate planning and Medi-Cal attorneys who can help you evaluate your situation and determine the best solutions for your future. Contact us today to schedule your free consultation.