This month our Co-founder, Michael Guerrero, explains the complexities of MediCal eligibility of married couples when only one of the spouses needs care. To make this complex topic easy, Michael breaks it down using a case study of Anne and Doug. Michael is also the host of our new webinar series, making Medicaid eligibility easy. Make sure to watch the webinar on spousal Medicaid eligibility across the USA, which you can find here.
Doug and Anne had been married for 42 years when Anne had a devastating stroke paralyzing the left side of her body and leaving her unable to get out of bed without assistance. She would need long term care in a skilled nursing home in Sacramento area indefinitely. They have two children and their eldest daughter, Erica, was assigned to be a Durable Power of Attorney for them both because she lived the closest to them—about 45-minute drive.
Doug was scared because, at their current rate of spending for nursing home care, their life savings would be wiped out in about a year.
In addition to the shock and grief that Doug felt, he was scared because, at their current rate of spending for nursing home care, their life savings would be wiped out in about a year. Furthermore, Doug did not want Anne to live in a nursing home. He wanted help to care for her at home.
Erica turned to Elder Care Resource Planning to help with her parent’s case. She explained that they own a home, a car, and had modest savings of $180,000 in investments and money market accounts. Her parents lived on their Social Security Retirement income. Between the two of them, this income stream was about $2,800 per month.
Under the special Medicaid eligibility rules for couples, the state of California will only use the income in the name of the spouse who needs care.
She had never heard of the federal Spousal Impoverishment Rules and how they might be used to protect the assets for her father and make sure that her mother had her care paid for by Medi-Cal. But what Erica really wanted to know was how to be able to afford to pay for care for her mother at home instead of in a nursing home.
Under the special Medicaid eligibility rules for couples, the state of California will only use the income in the name of the spouse who needs care. This is known as the “name on the check” rule. Anne’s Social Security Retirement was $1,086 before any deductions. This is below the Medi-Cal Income Limit of $1,285 a month. So, Anne would be eligible without any Share of Cost (the share of the total healthcare cost that you need to pay yourself, based on your income).
Erica was really worried about the savings that her parents had. She had heard that they had to be broke before they could use their Medi-Cal benefits. This is where the Spousal Impoverishment Rules really shine. All her parents’ money could be saved and her mother could immediately get the benefits started. There was no concern about the “Look-back Period.”
In general, for all Medi-Cal applicants, certain assets are exempt and other resources are countable. The applicant must not have more than $2,000, but their spouse may have up to $123,600 in non-exempt assets. Examples of these assets include checking, savings, brokerage accounts, investments, cash surrender value of a life insurance policy, and any non-tax qualified annuities (Tax qualified retirement accounts can be exempt in California when they are making regular distributions, e.g. Required Minimum Distributions).
The applicant must not have more than $2,000, but their spouse may have up to $123,600 in non-exempt assets.
Doug could use the Community Spousal Resource Allowance for up to $123,600. This leaves $56,400 of their savings that is not exempt. Doug could pay off any debts that they have, pay for his and Anne’s funeral and burial expenses, and make any improvements to the house that would be necessary to provide for a comfortable and safe environment for Anne.
If there are still funds left over after these expenditures, then Doug could purchase an ‘income stream’ in his name. Because only income in the name of the applicant is countable for Medi-Cal eligibility, the income in his name would not be relevant for his wife’s Medi-Cal benefits.
Either a single premium immediate annuity or a promissory note which is written with certain specific conditions into it can be used as a Medi-Cal Compliant income stream. Readers interested in this option should consult an advisor familiar with the Medi-Cal rules who can provide professional guidance on the process to purchase a correctly designed annuity or promissory note.
Finally, Doug and Erica want to bring their mother home to care for her there. After a period of recovery, Anne was able to recover enough strength to be able to safely live outside of the nursing home.
Medi-Cal benefits can be changed to a series of services and supports for seniors to successfully live at home instead of in a nursing home.
Medi-Cal benefits can be changed to a series of services and supports for seniors to successfully live at home instead of in a nursing home. Under a July 2017 rule change, community Medi-Cal benefits must use the same Spousal Impoverishment Rules as previously only applied to nursing home care cases. This means that Doug can still qualify Anne and use Medi-Cal benefits to pay for home caregivers. A friend or a family member can even be hired to provide the care for their parent or loved one.
If you are in a similar situation to the case of Doug and Anne, Elder Care Resource Planning offers free initial consultations to help you understand the options that are available to become eligible for Medi-Cal’s valuable long-term care benefits, either at home or in a nursing home. To book your free appointment, call us at 415-854-8653 or fill in the contact form: