10/25/2010 @ 2:48:PM By Maureen Lyons
Medi-Cal (or Medicaid) “crisis planning” can be precipitated in the case of a senior who has either been admitted to a nursing home or is about to be placed in a nursing home — while being told that they have too much in assets to qualify for the program.
Given the high expense ofÂ nursing homes, (upwards of $70,000 per year) many people look for ways to defray the costs ofÂ long term care through Medi-Cal.Â Through proper crisis planning, a senior’s hard earned savings may be protected from Medi-Cal.
There’s a lot of misinformation circulating out there. It is important that you consult with a qualified elder law attorney who is familiar with the Medi-Cal process.
There are strategic approaches that can help. While transfers either outright to a family member or to an irrevocable trust can create a penalty period for the person making the gift, sometimes a planned strategy involving gifting and the use of an annuity can provide a valuable planning tool.
For example, assume Mr. Jones suffers a stroke and ends up in a nursing home, and his cost of care exceeds the couple’s existing monthly income. However, the their total assets may be over the state’s allowable limit for a married couple.
One approach is to purchase an annuity, thereby converting excess assets into an income stream. This may enable Mr. Jones to qualify for Medi-Cal. In addition, the annuity can provide Mrs. Jones with extra income to supplement the loss of her husband’s income (which must be paid to the care facility).
For a single person in crisis planning, a plan of partial gifting plus the purchase of an annuity may also be appropriate. It should be noted, however, that any time a Medi-Cal applicant makes a gift, whether it is to a person or a trust, there can be a corresponding “penalty” or waiting period based on the size of the gift. The larger the gift, the longer a Medi-Cal applicant may have to wait to obtain eligibility.
The above examples should not be attempted without consulting a qualified elder law attorney. These are just used as illustrations to demonstrate how a legal advisor can help a senior fund long-term care requirements.