Plan Today, Save Tomorrow: 6 Things You Can Do to Start Planning for Medi-Cal.
When thinking about your future, it is often the steps you take today that can have the biggest impact. If you want to make sure you are able to qualify for the Medi-Cal program (California’s Medicaid program) when the time comes, there are a lot of things you can do today. Planning for this type of
Understand Countable Assets and Understand Non-Countable AssetsWhen it comes to planning for Medi-Cal, one of the most important things you can do is
take some time to learn about countable assets. These are any assets that will be
counted when deciding whether or not you will qualify for the program. The following are
some of the most common examples of countable assets:
• Cash & Savings – Any financial accounts such as checking and savings accounts,
money market accounts, CDs, and more.
• Long Term Savings – Stocks, bonds, mutual funds, retirement accounts including
IRAs, 401(k)’s, 403b’s, SEP IRAs, and others.
• Value of Life Insurance – If you have a cash value (whole life) insurance policy,
the cash value contained within that policy is countable.
• Vehicles – While your primary vehicle is not countable, all additional vehicles are.
This includes trucks, boats, machinery, and others.
• Some Real Estate – Some types of real estate are countable. This will typically
include cottages, vacation homes, “hunting property,” and more.
Part of planning for Medi-Cal may include purchasing or keeping certain non-countable
assets to reduce the amount of countable assets you have on hand. This is often called
a Medi-Cal spend down. While this usually occurs only when you believe you may need
Medi-Cal in the near future, it is good to know which assets won’t be counted against
you. They typically include:
• Primary Vehicle – The main vehicle that you use for day to day transportation.
• Non-Distributed Inheritance – If you have an inheritance coming from the death of a
loved one, but it is still in probate or otherwise delayed, that won’t count at this time.
Once you receive it, however, it may become countable, so make sure to discuss this
with an attorney.
• Primary Residence – In many cases your primary residence won’t count. This is
especially true if you live there with a spouse or dependent child who would face
hardship if you had to sell the home.
• Appliances – Major appliances are not countable.
There are others as well. When trying to determine if an asset is countable, look at
whether or not you are able to get cash out of them. If the asset is unavailable to you,
then it won’t be counted in most situations. You do, however, have to be careful not to
make any obvious abuses of this or the Medi-Cal program can come back to attempt to
collect assets even after you have passed away.
Don’t Transfer Assets and Take Advantages of TrustsThere are many times when you may want to transfer some of your assets to a loved
one. Some people try to do this to reduce their total assets so they can qualify for MediCal, and others do it simply to help out a loved one. Regardless of your intention,
transferring your assets can cause real problems when it comes to your future planning.
This is because the Medi-Cal program will look at the past five years of your financial
transactions to determine if you qualify. If during that five years they notice that you
have been transferring assets out of your name, they may deny your application. Even if
your intent wasn’t to reduce your countable assets to ensure you can qualify for the
program, they can still consider the assets you transferred.
Trusts are an estate planning tool that you can place assets into so they are set aside
for a specific use. Irrevocable trusts are a specific type that once created, can’t be
revoked or changed. This means if you place some of your assets in a trust, they will
typically become non-countable assets. While you can’t typically do this type of thing
with the obvious intent of hiding assets in order to qualify for Medi-Cal, there are options
For example, if you have an adult child with special needs, you will likely want to put
some money away for their care after you’re gone. A great way to do this is to create a
special needs trust designated for their care. You can then begin placing money into
that trust each year so that it builds up over time. In most cases, even the money added
to this type of trust during the previous five years won’t be counted since you don’t have
access to it and you had been doing it for quite some time. There are a variety of other
types of trusts that may allow this type of asset protection, so talk to an estate planning
attorney to go over your options.