Medicaid, known as “Medi-Cal” in California, is a national program that is administered by each state. It was first introduced in 1965 as part of President Lyndon B. Johnson’s “Great Society.” The rules and regulations change constantly, and vary from state to state. Despite Congress’s attempts to streamline Medicaid administration, many states (most notably California) continue to follow their own administrative scheme.
Medi-Cal is a very complex program about which people have many common misconceptions. The most common of these include:
“Don’t I have to dispose of all of my money and assets?”
Probably the most common misconception people have is that they have to exhaust all of their assets and sell their home before becoming eligible for Medi-Cal. This often leads people to make poor decisions, including selling their homes or transferring their assets improperly to family members, in hopes that this will help them qualifying immediately for Medi-Cal.
The truth is that many times these transfers are not only unnecessary, they can actually result in many months of ineligibility for Medi-Cal benefits. That is why it is important to see an elder law attorney before taking any action to sell or transfer assets. The savings – in terms of minimizing potential Medi-Cal ineligibility – are usually quite significant.
“My husband or wife is already in a nursing home, so it is too late to do anything.”
While it is an unfortunate fact that family members often wait too long to contact an elder law attorney, the good news is that it is rarely too late to set up a good plan. While more assets can often be preserved when the plan is set up early, it is also true that it is generally never too late to attempt to preserve those assets.
Asset protection does become more difficult if, however, the recipient has lost mental capacity. If existing estate planning documents (such as a revocable living trust and/or durable powers of attorney) are not set up to properly address the issue of asset protection, if the person seeking Medi-Cal eligibility has lost mental capacity then court involvement may be necessary. This is both expensive and time consuming. As a result, you should seek the counsel of an elder law attorney when you first begin to see the signs of memory loss.
Finally, if a parent or spouse has been discharged from the hospital or has been diagnosed as having Alzheimers, Parkinson’s disease, ALS (Lou Gherig’s disease) or cancer, then you should seriously consider seeing an elder law attorney. By preparing today, you can avoid unnecessary stress and asset loss in the future.