You can decide to pay for it yourself. This will quickly deplete all but the largest estates. The average cost of care in California is currently around $6,000 per month. Obviously, this is not the preferred option for most people.
You may think Medicare will pay for your care. Medicare will only pay for the first 100 days of care in a skilled nursing facility. Again, this is not a viable solution.
If you can qualify and afford it, long-term insurance is a good investment for you and your family. In addition to paying for skilled nursing care, a good long-term care policy will pay for in-home care and stay in either residential care or assisted living facilities. Most long-term care policies expire after a pool of benefits has been paid out (typically two or four years). Also, your long-term care policy may not cover the entire cost of skilled nursing care.
The last option to pay for skilled care is to apply for and receive Medi-Cal. In order to receive Medi-Cal, you must meet certain eligibility requirements. First, you must meet certain asset requirements. Assets are divided into two categories – exempt and non-exempt. Exempt assets are not counted in determining Medi-Cal eligibility while non-exempt assets are counted in determining eligibility. A single person is entitled to have $2,000 of non-exempt assets. A married couple can have $111,560 in non-exempt assets ($2,000 for the ill spouse and $109,560 for the healthy spouse). In addition, the healthy spouse is entitled to have a minimum monthly income of $2,739 and may be entitled to keep assets over $109,560 in order to generate enough income to make-up for any shortfall in income the spouse may have.
In order to qualify for Medi-Cal, it is often necessary to take non-exempt assets and convert them to exempt assets. It is also possible to give away assets in order to qualify for Medi-Cal. If you, or your representative (with proper legal authority) give assets away, you will be ineligible for Medi-Cal for a period of up to 30 months. Done properly, with the advice of an elder law attorney, a gift that would otherwise generate 22 months of ineligibility may only generate 4 months of ineligibility. In all cases, it is important to remove the Medi-Cal recipient’s name from assets after qualification in order to prevent the state from attempting to file an estate claim after death for reimbursement for benefits paid.
In order to implement these and other techniques, it is necessary for your spouse and/or your children and other beneficiaries to have legal authority to make gifts, remove assets from your name, and convert non-exempt assets to exempt assets. Most estate plans do not build in this flexibility because the attorney that drafted the document did not practice in the field of elder law. If your estate planning documents do not contain the proper provisions, it will be necessary for your spouse and/or your children and other beneficiaries to go to court to get legal permission to take these actions. It is very important to have an elder law attorney review your estate planning documents to make sure that these provisions are present. If not, your estate plan can be amended to include these provisions. Even if you have a loved one already in a nursing home, many of the these techniques can still be utilized, although it will often involve seeking a court order.
An elder law attorney will analyze your situation and make recommendations as to the best way to reposition assets in order to qualify for Medi-Cal. Once the plan has been implemented and the time comes, an application is submitted. If the application is approved, Medi-Cal will begin to pay for the applicant’s skilled nursing care. If the application is denied, then the applicant or his or her representative may file an appeal. In any case, this is a very complicated field of law and the services of an elder law attorney are vital, in particular since California will be implementing the Deficit Reduction Act later this year which will make sweeping changes to the Medi-Cal rules, particularly with regard to eligibility. Call me at (408)513-3626 or contact our office today to make an appointment to discuss how this type of planning may benefit you.
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