What are Medi-Cal’s Resource Limits?
Medi-Cal classifies property as "exempt" and "non-exempt". Exempt property is not counted in determining eligibility; non-exempt property is counted.
Non-Exempt Resources -
For a Single Individual: Up to $2,000 in cash reserve, e.g., in savings, checking, etc., for the Medi-Cal applicant/beneficiary. Any resources above the property reserve limits of $2,000 that are not exempt will be counted by Medi-Cal in determining eligibility.
For Married Couples: California law allows the community spouse (the at-home spouse) to retain the first $117,240 (for 2014) in non- exempt resources available to the couple at the time of application. The applicant spouse is still entitled to his or her $2,000. This spousal resource maximum increases every year according to the Consumer Price Index. The community spouse’s separate property, i.e. money from an inheritance or bequest or from a previous marriage, will also be counted in the total resources and subjected to the $117,240 limit.
Exempt Resources -
The following property is generally exempt and, therefore, not counted in determining eligibility:
- The Home is totally excluded if it is the principal residence and a spouse or disable child is residing within. If there is no spouse or disabled child living in the home, the home will be exempt only if the net equity is $825,000 or less. It can be a mobile home, houseboat, or an entire multi-unit dwelling, as long as any portion serves as the principal residence of the applicant.
- Other Real Property may be excluded if it is used in whole or in part as a business or means of self-support, but not rental property held for investment purposes.
- Household goods and personal effects are totally exempt
- Jewelry for a single person, such as wedding and/or engagement rings and heirlooms are totally exempt; other items of jewelry with net market value of $100 or less are exempt; for spouses, no limit on exempt jewelry for determining institutionalized spouse's eligibility.
- One Car is exempt if used for the benefit of the applicant/beneficiary or if needed for medical reasons.
- Life Insurance: whole or ordinary life policies are only exempt up to a total face or cash value of $1,500. Term life insurance is totally exempt.
- Burial Plots are totally excluded.
- A Prepaid Irrevocable Burial Plan of any amount plus the sum of $1,500 in a designated burial fund or account are exempt. These designated funds must be kept separate from all other accounts. Accumulated interest on burial funds is also exempt.
- Cash surrender value or balance of pension funds, IRAs, and qualified tax deferred annuities (regardless of value) are considered unavailable if the applicant is receiving periodic payments of interest and principal. There is no minimum amount of periodic payment required. All such funds belonging to a community spouse are exempt, whether or not s/he is receiving any periodic distributions.
Can You Spend Down Resources?
You may spend down your resources to the $2,000 limit in order to become eligible for Medi-Cal. Resources must be reduced to the $2,000 level by the end of the month in which you want to be eligible. You may spend down your assets on any item for your own benefit: to remodel or repair the home, buy new furniture or pay off a mortgage or car loan, pay off other bills and debts, buy new clothing, medical equipment, outings, or even a vacation.
Can You Give Away Assets & Still Be Eligible For Medi-Cal?
You may be able to give away (gift) or transfer property (money, land, etc.) and still be eligible for Medi-Cal, depending on to whom and when you gave away the assets. The current California transfer of assets law requires a 30 month "look back" period to determine if an institutionalized Medi-Cal applicant made an improper transfer or gift of non-exempt assets to a third party, excluding the spouse. Transfers to spouses are without any penalty, regardless of the asset, or its value.
An "improper" transfer is basically giving away or gifting away property without receiving something of equal value in return, or done so specifically for purposes of qualifying for Medi-Cal. The transfer rule is triggered when you apply for Medi-Cal. The Medi-Cal application will ask if you transferred any property or made any gifts within the prior 30 months. The Medi-Cal eligibility worker will review the application and all supporting documentation submitted with the application, e.g. bank statements, trusts, brokerage statements, life insurance policies, deeds, etc. These transfer rules apply only to assets that are not exempt.
Not all transfers are subject to these transfer rules, and not all transfers result in a period of ineligibility. Transfer penalties will not apply if the transfer was made:
What is the Effect of Your Income?
Single Individual: An individual living in a SNF who becomes Medi-Cal eligible must pay his/her “share of cost (SOC) before Medi-Cal begins paying its share of the SNF monthly ‘room and board.’ An individual’s SOC is computed by subtracting from his/her gross monthly income any health insurance premiums they have (including Medicare’s Part B premium) and a $35 allowance. The balance, or net income, then becomes the share of cost.
Married Couples: Under California law, the at-home spouse is entitled to what is called the community spouse’s "minimum monthly maintenance needs allowance" (MMMNA). This allowance is adjusted annually by a cost of living increase and is now $2,931 2014). This means, that if the community spouse’s income is less than the MMMNA, s/he will be able to take as much of the institutionalized spouse’s income as s/he needs to reach the MMMNA amount. The remaining balance of the institutionalized spouse’s net income, after the MMMNA deduction, then becomes his or her share of cost payable monthly to the SNF.
Liens and Estate Claims
Consumers often confuse liens and estate claims. Both have been used by the state in attempts to reimburse the Medi-Cal program for payments made to beneficiaries. Liens are imposed on living beneficiaries' estates to "hold" the property until the beneficiary or surviving spouse dies. Estate claims are claims made against the estate of the deceased Medi-Cal beneficiary.
Your home, for example, may be an exempt asset while you are alive and not counted for Medi-Cal eligibility purposes. However, if the home, or a portion, is still titled in the Medi-Cal recipient’s name on his/her death, the state can place a claim against that person’s estate for the amount of Medi-Cal benefits paid, unless the Medi-Cal recipient is survived by a spouse, in which case the claim will be only levied against the estate when the surviving spouse eventually dies.
Can the State Place a Lien on Your Home?
Not any more! For a brief period of time, California law permitted liens against the homes of nursing home Medi-Cal beneficiaries who were not "reasonably expected" to return home, and against the real property of the surviving spouse of a deceased nursing home beneficiary. California is no longer permitted to impose liens against the homes of nursing home residents or their surviving spouses, except in cases where the home is not exempt and is being sold.
When Can the State Place a Claim Against an Estate?
After the beneficiary's death, the State can make a claim against the estate of an individual who was 55 years of age or older at the time s/he received Medi-Cal benefits, or who received Medi-Cal in a nursing home. California may now seek recovery from any real or personal property or any other assets in which the individual had any legal title to or interest in at the time of death. Unfortunately, this means that the state can now place a claim against joint tenancies, tenants in common, living trusts, revocable life estates or "other arrangements." This includes assets received by a surviving spouse by distribution or survival, e.g., assets left by a, will or community property.
Right to a Hearing
No recovery can be made until after the death of the surviving spouse and only if there is no minor, blind or disabled child. California is required to establish notice and hearing procedures for waiver of estate claims if recovery would work an undue hardship
How Can You Avoid an Estate Claim?
The best way to avoid an estate claim is not to have anything in your estate when you die. All Medi-Cal applicants who have a home they would like to leave to their children or someone else should declare an intent to return home on the Medi-Cal application. This will retain the home as an "exempt" asset, and exempt assets can thereafter be transferred without affecting Medi-Cal eligibility.
If you have a spouse in a nursing home and are concerned about an estate claim, you might consider having the institutionalized spouse's interest in the home transferred to you, the "at-home" spouse. Any such transfers mentioned above should be reviewed with a qualified Medi-Cal knowledgeable estate planning attorney. Real property transfers usually involve tax consequences, which may outweigh the benefits of the transfer.