Medi-Cal Gifting Rules
Medi-Cal Asset transfer, also known as “Gifting”, can allow an individual who is anticipating using Medi-Cal to fund their nursing home expenses to take advantage of the Medi-Cal nursing home program without having to completely deplete all of their personal assets. Medi-Cal allows the applicant for the program to have only $2,000 in exempt assets, although the well spouse the “well spouse” to keep up to $113,640 as well as the their exempt property. Couples who find themselves over this limit may want to seriously consider transferring some of their assets by gifting them to loved ones in return for a fair-market consideration for such a transfer. Once assets are transferred, however, the potential applicant is ineligible for Medi-Cal for a specific period of time.
Federal Medicaid and California Medi-Cal requirements strengthening.
The California Medi-Cal nursing home criteria for eligibility has become much stricter in recent years. For all gifts made after January 1, 2010, the “look back” period increases from the prior 3-years to 5-years. Medi-Cal is attempting to discourage people from giving away their assets to enable them to take advantage of the California Medi-Cal nursing home program which is why the Federal government implemented the longer “look back” period and forced the states to lengthened the penalty period of ineligibility.
During the look back period the state of California will look back at your financial records to determine whether your or your spouse made a gift of your assets.
Medi-Cal “Look-Back” penality-periods lengthened from 3 to 5 years.
The penalty period is a period where the senior is disqualified for Medi-Cal nursing home benefits is a transfer was made during the look back period. The penalty period length is determined by dividing the amount which was “gifted” or transferred, less the value received in return by the average monthly cost of care. The penalty period begins to run after you begin to receive care which would entitle you to Medi-Cal benefits if you otherwise qualified aside from the gift.
A typical “Look-Back” sceanario
As an example, if a senior who gifted $50,000 to a son or daughter within the 5-year look back period, that gift would result in a penalty period of 10-months which would not start until the senior was otherwise eligible for Medi-Cal nursing home benefits. A gift of roughly one million dollars made within the 5- year look back period would result in a penalty of 100-months or 8.33 years, making the Medi-Cal beneficiary ineligible for Medi-Cal nursing home benefits until that time period had passed. However, should either of those gifts be made five years and 1-day prior to application for Medi-Cal nursing home benefits there is no penalty involved. Thus the importance of Medi-Cal pre-planning if your situation allow you such a time window.
Exempt transfers of gifts.
There are transfers and gifts which are exempt from the Medi-Cal look back period and subsequent penalties. The transfer of a home to a child who lived at least 2-years with the Medi-Cal applicant, providing necessary care which effective kept the applicant out of a nursing home is one such exemption. Others include transfers which are for the sole benefit of a spouse, gifts or transfer which benefit a disabled person under the age of 65, transfers to a disabled child, and transfers to a sibling who lived in the home for over one year and possessed an equity interest in the home. There are other exceptions as well, however you should absolutely consult an experienced California Medical Asset Planning and Elder Care attorney who can assess your individual family situation and determine which exceptions might apply. Federal and California Medi-Cal rules are continually changing and are very complex. If you want to take advantage of the Medi-Cal gifting rules, do so with experienced legal guidance.
Medi-Cal Asset Planning attorney Alice A. Salvo offers a FREE initial consultation that will answer many of the questions not covered here on our web site. Call us to schedule your appointment.
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