It is better to give than to receive, the saying goes. That old adage is usually true, except when you’re trying to qualify for Medi-Cal coverage for Skilled Nursing Care.

Last week I talked about “spending down” as a way to reduce assets in order to qualify for Medi-Cal. But the rules and regulations governing “spend down” are very tricky. You should always use an elder law attorney to guide you through the spend-down process and prevent you from being disqualified for Medi-Cal benefits.

Do Not Attempt Alone

Gifting away resources in an attempt to qualify for Medi-Cal is a dangerous practice; and should be attempted only with the help of an expert. Gifting without full knowledge of the relevant Medi-Cal, tax, and state and federal laws can result in substantial penalties, including hefty tax liabilities and benefits ineligibility, often costing the family much more than otherwise would have been spent.

Penalties for Gifting only Apply to Nursing Home Coverage

The penalties for “gifting” only apply if the applicant is in or entering a skilled nursing facility. If the applicant lives at home and gives away property, there are no transfer penalties. Medi-Cal’s transfer rules are triggered when a person enters a nursing home or applies for coverage for skilled nursing care.

After you submit your application, Medi-Cal will look at all of your financial transactions over the past 30 months to make sure you didn’t make any disqualifying transfers of your countable (or “non-exempt”) assets. A “transfer” is an outright gift or a sale made at less than “fair market value.”

For example, if you made a generous gift of $40,000 to help pay your daughter’s mortgage last year, this counts as a disqualifying transfer of funds. Medi-Cal calculates the period of disqualification by dividing the amount gifted ($40,000) by the Average Private Pay Rate (currently $8,092), resulting in a five-month disqualification, and leaving you to foot the bill.

Our Estate Planning and Elder Law attorneys can develop a Medi-Cal qualification plan for you and your loved ones, guiding you through the spend-down, gifting, and application process to ensure you qualify for the benefits you deserve. To get started or learn more, contact us.