MEDICARE, Medicaid, Medi-Cal. If your 65th birthday is on the horizon, then these terms may have begun to appear on your radar. Unfortunately, because the three are so similar in name, people tend to confuse one program with another. So what exactly are the differences?
Medicare is a federally funded program that provides basic healthcare coverage for Americans ages 65 and above (and certain disabled individuals). If you have a heart attack and are admitted to the hospital for a few days, Medicare will typically cover that short-term stay. Medicare is an entitlement program, meaning just about any 65-year-old American is eligible – even someone as rich as Donald Trump.
Medicaid is a jointly funded federal and state program that provides healthcare coverage for individuals with limited income and resources. It is a needs-based program, which means you have to qualify in order to receive benefits.
Medi-Cal is California’s version of Medicaid (the “Cal” stands for “California”). Most people are concerned with the type of Medi-Cal that deals with long-term care, i.e., skilled nursing facilities.
Unfortunately, the “Medi” mix-ups generate a lot of misinformation about Medi-Cal eligibility and qualification process and as a result, there is a general misunderstanding about the way the program operates. This article intends to identify the three most common Medi-Cal myths and explain why they are false.
Myth #1: “I have too much money to qualify for Medi-Cal.”
By far the most common reason why people do not explore the Medi-Cal program is because they believe their income or assets are too high to receive benefits.
The first thing to note is that long-term care Medi-Cal is determined by the amount of assets you have; it is not determined by your income. As long as you are below the requisite asset limit, you are Medi-Cal eligible.
While it is true that you cannot receive Medi-Cal benefits if you have too many assets, it does not mean that you are permanently ineligible. There are legal ways to protect, purchase, transfer, and/or liquidate your assets in order to qualify. If done correctly and by the book, this can be a tremendous way to protect your life savings and receive long-term care benefits.
Myth #2: “I have to wait 3-5 years because Medi-Cal can ‘look back’ to see if I’ve transferred my assets.”
The Medi-Cal “look back” period is one of the most misunderstood concepts in the healthcare system. As I mentioned, there are ways to protect your assets and qualify for Medi-Cal…but it must be done properly.
The easiest way to explain the look back period is through an example. Let’s say Donald Trump needed nursing home care and wanted Medi-Cal to pay for it. If he applied, he would get denied due to his abundance of assets. As a result, President Trump gifts his properties, money, and other countable assets to his three children. Now that he’s under the asset limit, he will receive Medi-Cal benefits, right? Wrong.
Currently, Medi-Cal can “look back” to see if you’ve made significant transfers like this within the past 30 months (2.5 years). A new law, the Deficit Reduction Act (DRA), will change this timeframe to 60 months (5 years).
If you have made a significant transfer, then you will be penalized with a period of ineligibility. In Donald Trump’s case, even if he has no assets, he will be ineligible from receiving Medi-Cal until 2020 (under current laws) or 2023 (under the DRA).
Many people dismiss the possibility of receiving Medi-Cal when they hear about the look back period, but it’s not as discouraging as it seems. An experienced attorney can help you navigate through Medi-Cal’s labyrinth of rules to legally transfer your assets without triggering any penalty period.
Myth #3: “If I use Medi-Cal, the State of California will take my home when I die.”
If you use Medi-Cal benefits during your lifetime, then the State of California will try to recoup the money they spent on your medical care after you’re gone. Essentially, the State can recover assets (like your home) left in your probate estate. This is when people tend to panic.
The good news is that an estate recovery is 100% preventable. There are several ways to protect your home and ensure that your assets are passed on to your children (or other loved ones). As long as your home is funded into a revocable living trust, your home is shielded from Medi-Cal recovery.
There are several other ways to shelter your home and other countable assets. Strategies differ depending upon the individual, but a plan can be customized to fit your personal circumstances and goals.
It’s easy to see how these Medi-Cal myths can deter someone from trying to apply for benefits. Though the intricacies of the rules and regulations are difficult to translate, it is possible to protect your life savings, protect your home, and have your long-term care paid for with the assistance of an experienced attorney.
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Judd Matsunaga, Esq. is the founding attorney of Elder Law Services of California and practices Medi-Cal Planning, Estate Planning, Probate, and Trust Administration. Judd can be contacted at (310) 348-2995 or [email protected]. The opinions expressed in this article are the author’s own and do not necessarily reflect the view of the Asian American Journal. The information presented does not constitute legal advice and should not be treated as such.
