Why You Need to Protect Assets from the Medi-Cal Spend Down

California Medicaid, or Medi-Cal, is a needs-based federal program that provides health care coverage for qualifying individuals. To determine eligibility, Medi-Cal will examine whether an applicant’s property, assets, and income exceed the program’s financial limit. If the value of your property is more than the Medi-Cal limit, you may be ineligible. In that instance, you may need to reduce or “spend down” your assets and income to meet or maintain Medi-Cal’s requirements. If you believe you need or will need Medi-Cal, it’s vital that you understand the program’s rules and why you need to protect your assets from the Medi-Cal spend down.

Medi-Cal and Long-Term Care

According to the U.S. Department of Health and Human Services, “at some point in our lives, about 60 percent of us will need assistance with things like getting dressed, driving to appointments, or making meals.” This type of assistance is often referred to as personal or long-term care. In California, long-term care can cost hundreds of dollars per day and tens of thousands of dollars per year. However, many people are not aware that Medicare does not cover extended long-term care services. Therefore, without planning, these types of expenses can quickly deplete a person’s life savings and other valued assets. If you cannot pay out-of-pocket and don’t have a long-term care insurance policy, you will probably need Medi-Cal to cover these types of costs.

Countable Assets and the Medi-Cal Spend Down

Although a person may not have health concerns now, planning for long-term care expenses is crucial. While Medi-Cal can help pay for long-term care and other medical costs, those with “countable resources” valued above a certain amount could end up being disqualified. Countable resources include assets and funds that have not been deemed as exempt by Medi-Cal for purposes of assessing program eligibility.

Resources such as bank accounts, non-primary residences, and investment accounts are usually considered countable assets by the program. Currently, the countable resource limit for older adults for regular Medi-Cal is $2,000 for individuals and $3,000 for couples. Therefore, individuals in this category who are looking to qualify for Medi-Cal benefits must either have assets valued below these levels or “spend down” what they have to meet the requirements.

Protecting Your Assets from the Medi-Cal Spend Down

Although Medi-Cal imposes strict limitations on asset value, there are ways to protect your property and still qualify for coverage. For instance, you may be able to place some of your property into a Medi-Cal Asset Protection Trust. Additionally, if you are married, your spouse may be able to keep more of your marital assets while you seek Medi-Cal qualification. However, it’s important to be aware of the Medi-Cal rules, as the program may not allow some spend-down actions. Medi-Cal also has a 30-month “lookback period” during which it will examine an applicant’s asset transfers to determine if they were disqualifying. By working with an experienced California Medi-Cal planning attorney, you can review your situation and determine the best ways to protect your assets while qualifying for Medi-Cal.

Changes Ahead for Med-Cal and Medicare Recipients

Due to a change in the law, the Medi-Cal asset test as applied to adults receiving Medicare, the federal health insurance program for people 65 and older and people under 65 with certain disabilities, is going to be phased out beginning July 1, 2022. No sooner than July 1, 2022, California will raise the asset limit in the programs serving these individuals to $130,000 for an individual and $65,000 for each additional family member. No sooner than January 1, 2024, the state will eliminate the asset test for this group entirely.

These changes are expected to expand access to Medi-Cal for approximately 18,000 new beneficiaries and improve access to benefits for almost 2 million Californians currently on Medi-Cal. In the meantime, older adults seeking to qualify for Medi-Cal benefits should consult with an experienced California Medi-Cal planning attorney about the program’s eligibility requirements and its continuing income limitations.

Medi-Cal can be a vital source of support, and it’s crucial that you plan for program eligibility before the need arises. Additionally, Medi-Cal is just one part of an overall strategy to protect your assets and plan for your future needs. The best way to help ensure that you have the advice and information you need to plan for your health care is by consulting with an experienced Medi-Cal planning attorney. Your Medi-Cal attorney can explain the Medi-Cal program requirements and help you determine how to prepare for your present and future needs. At the Law Offices of Alice A. Salvo, we are experienced California 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.