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Medi-Cal Planning

Case Conclusion Date: 01.01.2010

Practice Area: Elder law

Outcome: Qualified Wife for Medi-Cal and Saved Estate for Family

Description: Planning for someone to take residence in a skilled nursing home and being able to qualify them to have the Medi-Cal system pay for their care is all about having a thorough understanding of the rules. As an example, Husband and Wife had been married for several decades. Wife became severely ill with a condition which would result in her losing her higher level cognitive abilities first, and the remainder of her more basic mental functions being lost over an extended number of years. Skilled nursing home costs in Santa Clara County, California are typically between $6,000 - $10,000 per month. The financial impact of keeping Wife in a skilled nursing home would be devastating in any situation. To qualify for Medi-Cal to pay for Wife’s skilled nursing home care, she can own her own home but can’t have more than $2,000 of investment assets (including cash assets). Husband can’t have more than $109,560 of assets other than the home. This couple had about $3,000,000 of assets consisting of their home and four residential properties, one of which had recently been inherited by Husband and constituted his separate property. To qualify Wife to be able to receive Medi-Cal assistance to pay for her skilled nursing home cost, I reluctantly recommended that they divorce. The division of assets in the divorce caused the Husband’s inherited property and one half of the remaining assets to be removed from the Medi-Cal calculation. This left the Wife with her family home (remember this is exempt for qualification purposes) and two residential properties which they had acquired many years earlier. One of the Medi-Cal rules provides that if a Medi-Cal applicant has made a gift of assets within 30 months (California) of applying for Medi-Cal with the intention of thereby qualifying for Medi-Cal (by reducing their assets below the $2,000 limit), the applicant is denied Medi-Cal for a number of months based upon a formula. Medi-Cal uses the value shown on the real property assessor’s role to determine the “fair market value” of real property. And since the two residential properties had been acquired many years ago and were each valued at less than $20,000 on the assessor’s roles, I was able show Wife how to gift the two residential properties to her children resulting in only a two month disqualification to receive Medi-Cal benefits (starting with the month of the gift which occurred several months before Wife went into the nursing home and thus lapsed before she needed the coverage). We then showed her how to transfer her home into a special trust known as a MIDGT (one of five techniques available) will prevent the Medi-Cal system from filing a recovery claim against the home when Wife eventually passes away. In summary, we saved their entire life’s work.

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