Most of us hope we never need to go to a nursing home. But the fact is that today’s senior (65+) has about a one-in-four chance of spending time in a nursing home (also known as a skilled nursing facility, or SNF, pronounced “sniff”). Currently, more than 1.5 million American seniors live in SNFs, and 70 percent of them rely on Medicaid to pay the bill.
Why? Because SNFs are hugely expensive! The national average cost of an SNF is $6,900 per month. In California, the cost ranges from $7,500 to $12,000 a month, or $90,000-$144,000 a year. In Sonoma and Marin County, the average cost is $8,500 a month or $102,000 per year. This is way beyond most of our means!
In California, Medi-Cal (California’s version of the Medicaid program) will cover SNF costs if you meet the state’s financial eligibility requirements and a doctor deems the care “medically necessary.
In order to qualify for Medi-Cal, you must meet the following basic requirements:
- Be 65 or older or disabled;
- Have $2,000 or less in assets, or $119,220 if married. *
- Be receiving or need care in a Skilled Nursing Facility
*Some assets, including your home, car, or an IRA that is currently paying the Required Minimum Distributions (RMD), will not be counted.
If you qualify for Medi-Cal, the program will cover most if not all of your monthly SNF costs, saving you hundreds of thousands of dollars, depending on your length of stay.
“Spending Down” to Qualify
If your assets exceed the Medi-Cal asset/property limit, you will not be eligible for Medi-Cal unless you reduce your assets according to Medi-Cal rules. One way to do this is to “spend down,” which is Medi-Cal’s term for spending excess funds on acceptable expenses, such as paying off a mortgage, completing a long-needed home improvement, or purchasing a funeral and burial contract. Any money you spend must be spent on yourself; you can’t just give the money away.
Use Caution when Spending Down
Paying for a grandchild’s college, paying off a child’s home or making a charitable contribution are not considered acceptable “spend downs.” You also cannot “gift” the IRS annual exemption amount ($14,000) and consider it a “spend down.”
The rules and regulations governing “spend down” are very tricky. Always consult a qualified attorney who can guide you through the “spend down” process and prevent you from being disqualified for Medi-Cal benefits.
Beware the “Look Back”
The “look back” is a rule Medi-Cal applies when you submit an application for Medi-Cal coverage for Skilled Nursing care. Before accepting you, Medi-Cal will look at all of your financial transactions over the last 2.5 years or 30 months to make sure you didn’t make any disqualifying transfers of your money.
A question on the application asks whether you have given away any assets within the last 30 months. For instance, if you paid your granddaughter’s $40,000 college tuition, this counts as giving away assets. Medi-Cal uses a calculation that divides the amount gifted ($40,000) by the Average Private Pay Rate (currently $8,092), resulting in a five-month disqualification, and leaving you to pay for five months of care.
Consult with an Attorney
As you’ve probably gathered, qualifying for Medi-Cal is a complicated, convoluted and arduous process. Done right, it will give you peace of mind and save you hundreds of thousands of dollars. You should not navigate these waters alone. Protect yourself, your estate and your family: use a qualified attorney with expertise in Estate Planning and Elder Law to help you navigate the Medi-Cal system.