California Medi-Cal Planning: What Can the Healthy Spouse Keep?

Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 1

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 2

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 long-

term care.

Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 3

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 4

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 5

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 6

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 long-

term 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 7

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/cost-

of-care.html

LongTermCare.gov http://longtermcare.gov/

Medi-Cal Planning: What Can the Healthy Spouse Keep in California? www.norcalplanners.com 8

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