You may see it coming: Much as you want to and hard as you try, you just can’t take care of your ill spouse at home any more. At this emotionally difficult time, the last thing you need is the stress of not knowing where to find the money to pay for the steep costs of institutional care.
Advance planning is a must. As as soon as you can – ideally at least five years before serious health problems arise – take advantage of many elder attorneys’ willingness to talk with you for free, or for a modest initial-consultation charge.
We are here to help you navigate the complexities of the Medi-Cal program. This is a governmental fund available to meet the staggering expense of institutional care, but the ins and outs of the qualification rules are complicated and mistakes can be costly. Here’s a thumbnail to help you grasp what your attorney will be telling you.
“Resources” and “Income”: The Difference
Medi-Cal assistance is available only to those who own very little. The Medi-Cal rules determine what “owning very little” actually means. A person can only own around $2,000.00 of what Medi-Cal calls “resources.”
Resources include cash in the bank, CDs, the cash value of insurance policies, investments, and the like. Income includes regular paychecks, Social Security, or payments received for child support. Both income and resources are potentially “counted” by Medi-Cal as “available.” To qualify for assistance, available income and resources must be carefully spent or transferred away.
Some resources are not counted or, in other words, are exempt. This means the Medi-Cal rules exclude them from adding up to the $2,000.00 limit. These resources are sheltered from Medi-Cal’s requirement that the applicant must spend down almost everything before assistance will be available.
A married couple’s residence, one motor vehicle, household goods and furnishings, medical equipment, jewelry, up to $123,600 in investments owned by the well spouse, all IRA and other retirement assets, and other items are exempt. This means that an ill spouse can still qualify for Medi-Cal assistance even if the couple owns those resources. There’s no need to give them away or sell them to qualify.
The distinction between “exempt” and “non-exempt” assets can be tricky, though, and should first be assessed by a qualified elder-law attorney before any action is taken.
What the Well Spouse Can Keep
The Medi-Cal rules permit a spouse who remains at home to keep a portion of the couple’s resources. This is known as the “community spouse resource allowance” (CSRA). Of course you’d like to see the well spouse keep as much as possible within the CSRA limits. Planning can arrange the distribution of resources to make that happen.
Here is where the difference matters between “resources” and “income.” Medi-Cal distinguishes between the well spouse’s income and the couple’s resources. Resources over the CSRA limit must be spent down or carefully transferred. As to income, the well spouse can keep it up to a certain level, so he or she will have enough money to live on. The Medi-Cal rules call this the “monthly maintenance needs allowance” (MMNA).
For example, if the well spouse gets Social Security benefits of only $500.00 a month, but her allowed MMNA is as high as $2,000.00, it makes sense to convert some of the couple’s resources into raising her income up to the MMNA limit. This is not a simple matter, though, and should be done only on the advice of a qualified elder-law attorney.
Planning for Medi-Cal eligibility can be complicated. Please consult an elder-law attorney as soon as possible. The sooner you plan, the more strategies are available to protect your resources. An initial consultation with a qualified elder-law attorney, for free or for a modest amount, could save you many thousands of dollars.