How Does Medi-Cal Treat IRAs?

Hi there. Bridget Mackay. I’m an estate planning and elder law attorney in Petaluma, California, and I’m going to talk to you today about the treatment of IRAs, or individual retirement accounts, in determining Medi-Cal long-term care eligibility. So do you remember in an earlier video blog where I outlined sort of the basic requirements of Medi-Cal? One of the financial requirements of Medi-Cal is that your assets, in order for you to be eligible, your assets for a single person can’t exceed $2000, and if you are a spouse needing care and you are married, your total assets with your spouse cannot exceed $119,220. Sort of a weird number, but that’s what Medi-Cal has put out for requirements.

There are exclusions to those numbers. In other words, in determining those asset amounts, Medi-Cal does not count the value of your home. It does not count the value of your car. In fact, it does not count the principal value of some of your IRAs. An IRA is exempt from calculating assets for eligibility when you are taking your required minimum distributions. If you have an IRA and you are 70 and a half or over, you have been taking your required minimum distributions. This is the amount the IRS requires you to draw from those accounts on a yearly basis.

Let me give you an example

Let’s take Joe. He’s 75, he’s single, and he needs skilled nursing care, and he’s trying to qualify for Medi-Cal. His assets are a home, which he owns, one car, which he owns, a checking account that has $1500 in it, and he has an individual retirement account, or an IRA, with $400,000 in it. You would think he wouldn’t qualify because he has that IRA that’s $400,000, and the asset requirement is $2000. Do his assets make him eligible for Medi-Cal? Yes. Since he’s 75, he would be drawing his required minimum distributions from his IRA, meaning his $400,000 IRA would not be considered in determining his $2000 asset limit. It would be exempt.

Don’t attempt to qualify for Medi-Cal without the help of a knowledgeable attorney who practices in this area. As I said before in earlier videos, this is a very regulatory heavy area of practice, and you need to know what you’re doing, or else you could lose a lot of money trying to get there.