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Top 20 Medi-Cal Myths

 

Here is a list of the more common "Medi-Cal Myths" that make the process so baffling.

Myth

Fact

Medicare will cover my nursing home bill

Medicare only covers a small amount of the nursing home care provided.

I have to give away everything I own to get Medi-Cal.

You don't have to be completely destitute to get Medi-Cal.

If I give away assets to family or friends, I won't qualify for Medi-Cal.

It is true that some transfers of assets disqualify you from getting Medi-Cal. The value of the assets determines how long you will be disqualified. The point is, not all transfers cause problems with getting Medi-Cal

I have to wait three years after giving anything away to get Medi-Cal.

Medi-Cal rules do penalize some transfers of property, and the Medi-Cal agency will examine financial records three years back to see if asset transfers are made. The government doesn't want people "planning to be poor." But the length of time you have to wait isn't always three years.

I can keep all our marital property and my inherited property when my spouse gets Medi-Cal.

Medi-Cal rules generally consider all the assets in either spouse's name when one spouse enters a nursing home. However, there are certain property protections for the at-home spouse.

If I put my property in my spouse's name, I will be eligible for Medi-Cal.

Sorry, but no. See above

Medi-Cal rules that applied to my neighbor when he went into a nursing home will also apply to me.

This area of the Medi-Cal has changed quite a bit in the last few years, so don't assume the rules that applied to your neighbor are still in effect

If I enter a nursing home as a private pay resident, I must use up my assets before I can get Medi-Cal. I can only "spend down" my assets on medical or nursing home bills

This is wrong for several reasons. First, you are allowed to keep certain limited property. Second, you may be able to protect some of your assets - by buying certain non-countable assets or by making certain transfers to family members.

My power-of-attorney automatically has the power to take property out of my name, if I ever need Medi-Cal.

Most state laws require that you explicitly include a "gifting power" for your agent under the power of attorney to be able to re-title your property. If you want your agent to be able to transfer assets to provide more for your spouse and/or children, in particular, you should say so in your power of attorney.

I can only give away $10,000 per year under Medi-Cal rules.

This refers to a federal gift tax rule that has nothing to do with Medi-Cal law. We're talking apples and oranges here! A gift of $10,000 per year will probably trigger a Medi-Cal penalty, however short-lived.

Once I am in a nursing home it is too late to start Medi-Cal planning

It is never too late or too early to begin Medi-Cal Planning. In those cases where planning was not done and the person is already in a nursing home, assets can still be protected. There are strategies that we can use to help you qualify for Medi-cal in a short timeframe.

If my assets are owned by a living trust, they are protected from nursing homes.

Assets owned by a living trust are still vulnerable to nursing homes costs and are counted when determining financial eligibility. However, there are other types of trusts can be used to protect assets.

You can hide your assets to become eligible for Medi-Cal benefits.

Intentional misrepresentation of assets is a crime. Furthermore, there are several planning strategies that are available to legally restructure your assets and shelter them from long-term care costs. Therefore, with proper planning hiding assets is not necessary.

Once you enter a nursing home as private pay, you have to wait until a Medi-Cal bed is available before you can qualify for Medi-Cal.

This is incorrect, however you may be told this because private pay patients pay nursing homes more than the state does for Medi-Cal patients.

Also, when someone enters a nursing home they cannot be discharged because they change from private pay to Medi-Cal. However, if you plan to start as a private pay patient, be sure to ask if the facility accepts Medi-Cal.

The Medi-Cal office will answer all of my questions regarding Medi-Cal eligibility criteria before I apply.

Most of the time, they will not.  They usually provide you with income and resource guidelines that are factually correct but very misleading because of nuances in their practical application. Sometimes they encourage you to apply to see if you are eligible even though application at the wrong time could result in unnecessary periods of ineligibility. They sometimes tell you to spend down all of your money before applying when this is not always the best strategy

I have long-term care insurance so I will never need Medi-Cal. 

It all depends on the daily benefit amount, waiting or elimination period, and maximum benefit period.  Some long-term care insurance plans only provide coverage for a limited number of years or have daily benefit amounts less than the cost of care.  Some will only cover nursing home care while others cover home health and assisted living facilities.  It is good practice to completely understand the terms of your policy before making planning decisions.

All the information I need on Medi-Cal is available from my state Medi-Cal Office.

That is like saying everything you need to know about taxes is available from the IRS! Sure their offices can provide you with general knowledge about Medi-Cal program requirements, but what you need to know is usually not available from the people employed by the state to process applications. They are not in a position to be your advisor or advocate. They are paid to gather information and not give it out.

It is usually prudent, when faced with a nursing home crisis, to seek the assistance of a professional advisor. Again, be sure that the individual or firm that advises you is well versed in Medi-Cal eligibility requirements and long-term care issues. This will ensure that your specific needs are addressed and that you minimize the financial drain on your savings and maximize the preservation of your estate.

My Attorney/CPA/Financial Advisor will be able to help me with my Medi-Cal Eligibility.

Medi-Cal eligibility is a complex, ever-changing arena that requires very specific knowledge of federal as well as state program requirements and guidelines. There are many sources of general knowledge available to the public, none of which should be used as a planning tool for specific family situations.

The person you trust with your tax returns, your investments, your checking and savings account, or even your legal matters is probably not the person that you should trust with your eligibility for Medi-Cal benefits. These disciplines are unique and require a great deal of specific working knowledge and training in taxes, investing, banking, and law. Medi-Cal eligibility planning is another unique field of estate preservation and management. Should you need this type of information for yourself or a family member, please seek out a professional who specializes in this area of expertise.

You may want to test his or her qualifications by asking a few questions like "What is the current maximum income for a Medi-Cal applicant?" or "What is the current maximum Protected Resource Amount for a community spouse?"If there is a hesitation, or a need to go look up this information, then you're probably talking to the wrong person

My income is too high to ever qualify for Medicaid.

Until early 1994, many people could honestly make that statement, but not anymore. The Omnibus Budget Reconciliation Act of 1993 (OBRA '93) brought about many changes in the eligibility guidelines developed by the Health Care Finance Administration (HCFA). One area that OBRA '93 addressed is hardship cases where an individual's income exceeds the state's income maximum, but is still insufficient to pay privately for nursing home care.

I don't have enough money to need a professional advisor.

It is important for just about anyone with any money or property to have someone with specialized knowledge and experience help them with important financial or estate planning decisions.

Don't be intimidated by the thought that your estate is not worth someone’s time to talk to you. A good financial advisor treats everyone's estate with respect. You have worked hard to accumulate your savings for retirement, and those dollars should work hard for you after retirement.

Think of an advisor as someone who is standing on the other side of a minefield from you. You now have to cross that minefield. Since it is obvious that he or she didn’t take a wrong step, wouldn't it be wise to ask them where to step? (or more importantly, where not to step!) Why make financial mistakes that others have already made and paid dearly for, when you can avoid them entirely?

 

Within each of these myths is the ring of truth, perhaps accounting for how persistent they have remained in the public mind. Remember, these are all myths. And keep in mind that the answers given above are general rules that apply in California.

At D.A. Santos and Associates we separate the myths from the facts. Planning now for your long term care, breaking through the myths, and finding the facts will likely prevent distress in the future for your family and loved ones. In addition, it will give you the peace of mind knowing that your wishes will be honored and that your nest egg will not be destroyed by an unexpected illness or untimely death.

 

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