- WHAT CAN THE HEALTHY SPOUSE KEEP?

CALIFORNIA MEDI-CAL PLANNING - WHAT CAN THE HEALTHY SPOUSE KEEP? To be comprehensively prepared for the future, you should be fully cognizant of the eventualities of aging. TIMOTHY P. MURPHY NORTHERN CALIFORNIA CENTER FOR ESTATE PLANNING AND ELDER LAW Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 1

To be comprehensively prepared for the future, you should be fully cognizant of the eventualities of aging. No one wants to consider this, and it can be hard to wrap your head around it when you are younger. However, according to the United States Department of Health and Human Services, most senior citizens are going to need help with their activities of daily living at some point in time. In fact, 70 percent of people reaching the age of 65 will someday need longterm care. Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 2

You may not be concerned because you will be qualified for Medicare coverage when you attain senior citizen status. However, this is a mistake, because Medicare will not pay for long-term care. If you need living assistance, this is considered to be custodial care. Medicare will pay for up to 100 days of convalescent care after surgery, but it will not pick up the tab for custodial care. Paying out-of-pocket is simply out of reach for many people. In the state of California, the median cost for a private room in a nursing home exceeds $100,000 annually according to Genworth Financial. People often require multiple years of nursing home care, with around 10 percent of nursing home residents remaining in the facilities for at least five years. Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 3

THE MEDI-CAL SOLUTION For a high percentage of people who need long-term care in California, Medi-Cal is the solution. Medi-Cal is a jointly administered federal/state health insurance program. This program will pay for long-term care if you can qualify. Medi-Cal is only available to people who have very limited financial resources. For an individual, the limit on countable assets is just $2000. People who were never especially poor qualify for Medi-Cal through a measured divestiture of assets. You could simply give resources to loved ones who would have otherwise been inheriting them after you pass away. If you plan things effectively, you would have very little left in your own name if and when you qualify for Medi-Cal coverage. Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 4

RIGHTS OF HEALTHY SPOUSE In many cases, one spouse will need long-term care while the other spouse is still capable of living independently. Under these circumstances, the Medi- Cal program allows the healthy spouse to retain ownership of a certain store of assets. The healthy spouse is referred to as the community spouse. The community spouse can remain in the family home with no equity limit, and this is certainly a huge relief to many people. If someone is applying for Medi-Cal, under program rules most of his or her income would typically go toward for the cost of care. However, if the community spouse is relying on income that is drawn by the institutionalized spouse, this requirement is waived. The healthy spouse can continue to receive income that is due to the spouse who is receiving long-term care if it is needed. This is called a Monthly Maintenance Needs Allowance. Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 5

In the state of California in 2014, the Monthly Maintenance Needs Allowance is $2931. In addition to the Monthly Maintenance Needs Allowance, the healthy spouse can keep half of the shared countable assets, but there is a limit. This is called the Community Spouse Resource Allowance. For the rest of this year, the maximum Medi-Cal Community Spouse Resource Allowance is $117,240, and this is also the minimum. The minimum allowance gives the community spouse the right to keep no less than $117,240, even if this is more than half of the total assets in question. SUMMARY To summarize, Medi-Cal is a government health insurance program. Because Medicare does not pay for long-term care, many people who were never financially needy seek Medi-Cal eligibility late in their lives. Because Medi-Cal is a program that is based on financial need, there are income and asset limits that you must stay within if you want to qualify. When one spouse is staying at home while the other spouse is entering a longterm care facility, the healthy spouse is entitled to certain property rights. The community spouse can remain in the family home, and he or she can continue to draw income that is brought in by the spouse who needs living assistance. Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 6

The healthy spouse may also keep half of shared countable assets up to a certain limit. To learn more about long-term care and Medi-Cal planning, schedule a consultation with a licensed elder law attorney. REFERENCES Genworth Financial https://www.genworth.com/corporate/about-genworth/industry-expertise/costof-care.html LongTermCare.gov http://longtermcare.gov/ Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 7

About the Author Timothy P. Murphy Timothy P. Murphy is an estate planning and elder law attorney whose practice emphasizes helping people to build, preserve and pass on their wealth. He works with his clients to accomplish their goals while avoiding unnecessary court proceedings and minimizing or eliminating exposure to death taxes. Mr. Murphy also assists families facing the myriad of problems associated with dealing with a loved one s declining health and rising needs for care. He has practiced law in the Sacramento area for 29 years, first with a large firm, and then with his own firm since 1987. Tim has written a regular column on legal issues for Senior Magazine. He also was a regular featured guest on the Money Experts radio program heard locally on KFBK (AM 1530). Tim has been featured in the Sacramento Bee, Sacramento Business Journal, Sacramento Magazine, Comstock s Magazine and other publications on estate planning and related topics. He also assisted local Channel 3 (KCRA) in an investigative report on the trust mill problem in the Sacramento area and was featured on Channel 10 (KXTV) in its series on personal financial planning. Northern California Center for Estate Planning and Elder Law www.norcalplanners.com SACRAMENTO 2277 Fair Oaks Boulevard Suite 320 Sacramento, CA 95825-5599 Phone: (916) 437-3500 ROSEVILLE 3017 Douglas Blvd. Ste. 300 Roseville, CA 95661 Phone: (916) 437-3500 Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 8