One of the most important components of a well thought out estate plan is planning for long term care. Part of that planning is Medi-Cal Planning. As you age, Medi-Cal Planning becomes even more important. The need to include long term care planning in your estate plan is directly linked to the increased risk that you, or a spouse, will require long term care services at some point and the prohibitive cost of those services. Failing to plan ahead for the possibility that you will need to qualify for Medi-Cal could result in your application being denied because of Medi-Cal’s “look-back period.” To ensure that doesn’t happen to you, the Riverside Medi-Cal lawyers at Sandoval Legacy Group, A Professional Law Corporation explain the look-back period.
Will You Need Long-Term Care?
There is no way to know whether you, or a spouse, will need long-term care (LTC) in the future. You can, however, consider the odds and plan accordingly. The experts tell us that when you enter your retirement years at age 65 you will already stand at least a 50 percent chance of one day needing LTC. Every year after that your odds of need LTC increase. Keep in mind as well that if you are married, your spouse faces the same odds that you do. Given those odds, it only makes sense to plan for the possibility of incurring LTC costs for you or a spouse down the road.
LTC Costs in California
You probably know that LTC is expensive, but you may not realize just how expensive it is. In 2017, the average cost of LTC nationwide was about $7,000 a month. As you may well imagine, the cost in California is significantly higher than that. For that same year, the average cost of LTC in California was almost $9000 per month or over $100,000. With an average length of stay of 2.5 years, you could be looking at over $250,000 in LTC expenses.
The real problem is that contrary to what most seniors believe, Medicare will not cover LTC expenses for extended periods of time. Long term stays in a skilled nursing home, and the costs of assisted living and caregiving at home are also not covered by most health insurance plans. In fact, unless you purchased a separate long term care insurance policy at an additional cost, you could face the need to cover your LTC expenses out of pocket. For over half of all seniors in LTC, the only available help for the cost of an extended stay in a skilled nursing home is Medi-Cal. First, however, you will need to qualify for Medi-Cal coverage which is where the need for Medi-Cal planning comes into the picture.
Medi-Cal Eligibility and the Look-Back Rule
If you find yourself faced with the need to pay for LTC, Medi-Cal may be the solution; however, you must first qualify for benefits. Because Medi-Cal is a “needs based” program, Medi-Cal uses both an income and a “available resources” limit when evaluating applicants. The amount of assets, or available resources, you can have, can be extremely low. The number is based on whether you are married or unmarried and the nature of the assets. Although some assets, such as a primary residence and a vehicle, are exempt from consideration, it is still easy for a retiree to have non-exempt assets that exceed the limit. If your available resources exceed the program limits your application will be denied. Once upon a time, an applicant could simply transfer assets out of his/her name in anticipation of applying for Medicaid. That strategy, however, no longer works because Medi-Cal now imposes a “look-back” period that prohibits doing so. The look-back period in most states is 60 months; however, in California, it remains 30 months for the time being. Medi-Cal will review your finances for that 30 month period preceding your application. Asset transfers made for less than the fair market value during the look-back period may trigger the imposition of a penalty period. The length of the penalty period will depend on the value of the assets you transferred and the average monthly cost of a skilled nursing home stay as determined by the State of California. For example, let’s look at an example where a parent gifts assets valued at $120,000 to an adult child during the look-back period. In the example, we will use the 2018 APPR (Average Private Pay Rate – the calculation of the monthly cost of a skilled nursing facility as determined by the Department of Health Care Services) to determine the penalty period. Medi-Cal would impose a penalty period of 13 months ($120,000/$8,841=13.57). You would be responsible for covering your LTC expenses for the thirteen months after you transfer the the $120,000. Once the penalty period has run, you could apply for Long Term Care Medi-Cal coverage.
To prevent running afoul of the look-back period in the future, make sure you include Medi-Cal planning in your estate plan today.
Contact Riverside Medi-Cal Attorneys
If you have additional questions or concerns about Planning for Long Term Care, contact the experienced Riverside Medi-Cal lawyers at Sandoval Legacy Group, A Professional Law Corporation by clicking here or by calling (951) 888-1460 to schedule an appointment.
Have a question? Ask Dennis.