Medi-Cal Planning for Long Term Care
9/6/2010 @ 2:19:PM By Maureen Lyons
In previous posts I discussed how long term care needs of seniors can be met through self (or third-party) insurance. But what if these are not possible options?
A senior can use a planning technique called a “Medicaid” trust. (Here in California, it’s called “Medi-Cal” trust). This is part of a comprehensive wealth planning process that your legal advisor can help you with.
In this kind of trust, the trust maker retains the right to all of the trust income for life. However, the senior will irrevocably give up the right to receive or benefit from the principal of the trust. By using this type of trust, a senior can preserve capital and still qualify for Medi-Cal. This will happen only after expiration of the “look-back period” for the transfer of the trust.
This means that if assets have been transferred or given away during the period before applying for Medi-Cal, coverage can be denied. This period can be as much as 5 years.
There is a specific method to calculating this “penalty period” depending on your state’s provisions. Your legal advisor can give your the specifics of this calculation. The variables that will affect the time period are: (a) nursing home cost in your state, and (b) the dollar amount of the transfer.
What are the implications of this “look back period” in terms of the senior’s need for long term care?
For the trust strategy to work, there must be sufficient funds to pay for the long term care needs of the individual during the waiting period before applying for Medi-Cal. This can be met through insurance, an income stream, or other assets.
If a Medi-Cal trust is not desired, it is still possible to make “outright” gifts of property, wait until the look-back period expires, and then apply for coverage.
If the home is the senior’s only asset, there are still certain techniques to protect the property in the context of Medi-Cal eligibility.
What is important to note is that with any of the “advanced” planning strategies available, the senior must have sufficient funds to cover long term care costs during this ‘look back” time segment.
Its critically important that seniors consult with a qualified attorney, even when they think that they are engaging in “simple Medi-cal planning.
Long term care strategy, and specifically Medi-Cal planning is a highly specialized field. Laws are constantly changing, and there are a lot of myths and anecdotal “advice” circulating out there that can lead you down the wrong path.
Posted Under: Care Coordination, Comprehensive Estate Planning, Estate Planning, Life Care Planning, Medi-Cal Benefits
Tags: , LifeCare, long term care, Medi-Cal, Planning, seniors