ELDER LAW & MEDI-CAL
INTRODUCTION TO MEDI-CAL BENEFITS
This Medi-Cal overview focuses on qualifying for financial assistance related to institutional (nursing or convalescent home) care. Medi-Cal law is quite complex. Each analysis must balance current welfare, future estate distributions, the rules relating to qualifying for Medi-Cal, income- and estate-tax issues, claims against estates for recovery, and liens if Medi-Cal benefits are received.
Medi-Cal Defined. Medi-Cal is a joint federal-state program of medical assistance to eligible needy persons. Medical services are provided by participating providers and reimbursed according to state formulas.
While there are other eligibility requirements, if a person is "medically needy, "that person must meet certain financial criteria in order to be eligible for Medi-Cal. Once qualified, California will charge nominal copayments for the services provided to the person. In other words, if the eligible person has some income, that income must be used to pay a portion of the payments for medical services. During the person’s lifetime liens may be imposed on real property in certain cases, but they may be foreclosed upon only (1) after the death of the recipient or (2) upon sale of real property. Apart from liens, the cost of certain services must be recovered from the estate of the eligible person where the eligible person reached fifty-five (55) years of age or was older when the benefits were received.
California cannot require nonspouse relatives to contribute financial support; however, any actual contributions from those relatives are considered income to the recipient.
General Overview of the Rules. Other than acute care, the primary need for Medi-Cal is when a person becomes institutionalized; in other words, the person needs to live in a nursing or convalescent home. As already indicated, an institutionalized Medi-Cal recipient's income is expected to be used to pay for his or her own care. Only income received in the name of the Medi-Cal recipient is used to calculate the recipient’s income for qualification and for this reimbursement to Medi-Cal. The income that is chargeable is reduced by allowances for personal and maintenance needs.
California denies eligibility for a period of time to any institutionalized person who has transferred certain resources to someone other than the spouse for a less-than-fair-market value during or after a thirty-six (36) month period beginning immediately before applying for Medi-Cal. This "lookback" period encompasses transfers by the healthy spouse. A period of ineligibility commencing on the date of the transfer results from these transfers. The period of ineligibility is determined by the amount of the transfer divided by approximately $4,000.
When one spouse is institutionalized and the other remains in the community, California must permit the community (healthy) spouse to retain or acquire a Minimum Monthly Maintenance Needs Allowance (MMMNA) from the institutionalized spouse. The amount of the MMMNA is approximately $2,000. The community spouse can have income greater than this amount, but if the community spouse does not have income greater than that amount, then the institutionalized spouse must contribute to the MMMNA needs an allowance so that the community spouse has adequate monies with which to live.
The community spouse can also retain a Community Spouse Resource Allowance ("CSRA") of approximately $90,000 in nonexempt resources without affecting the institutionalized spouse's Medi-Cal eligibility. This means the community spouse can have assets totaling this amount without its affecting the Medi-Cal qualification of the institutionalized spouse. When one has greater values of assets, the person needing Medi-Cal or the spouse of that person will be expected to spend those assets before qualifying for Medi-Cal. It is interesting to note that retaining $90,000 may not be enough to earn $2,000 in income. In such a case, and in other instances, the community spouse would have to request permission from the Medi-Cal authorities or the court to retain more assets so as to obtain the minimum income allowed.