Dear Len & Rosie,
My mother, age 84, lives in a board and care and is getting close to needing full skilled nursing care. We found a nursing home that will take Medi-Cal but Iím wondering about Medi-Cal coming after my sister, who manages my motherís money, in attempt to recover funds from the family after my mother dies. You see, my mother wants to pay for her future funeral (as required) but also wants to give some gifts to her children and grandchildren. Will Medi-Cal claim sheís just emptying out her bank account and the family will therefore have to pay them back for my motherís nursing home care? I know there is a recovery division in Medi-Cal but I need more information about giving away her money. Someone told me that anything gifted prior to 30 months cannot be touched. Is this correct?
There are two parts to Medi-Cal planning: eligibility, the right hand that giveth, and recovery, the left hand that taketh away. Medi-Cal eligibility and Medi-Cal Estate recovery have absolutely nothing to do with one another, so we need to discuss them separately.
The eligibility branch of Medi-Cal will take nothing from your mother. They will either grant or deny her eligibility for benefits, depending on the circumstances when you file a Medi-Cal application on her behalf. To qualify, she must have a maximum of $2,000 in countable assets. Her prepaid funeral and burial, if itís irrevocable (she canít cash it in) doesnít count. Neither does her house if she has one, and her retirement accounts, one automobile and certain other assets.
Your mother cannot simply give her excess money away to qualify for benefits. When an application is filed, you must disclose any gifts made in the prior 30 months, and each gift triggers a transfer penalty during which your mother may not receive nursing home Medi-Cal. However, with careful planning, itís possible to minimize the transfer penalties so your mother will qualify sooner rather than later.
Medi-Cal recovery rules are different. Remember your motherís home. Itís exempt for eligibility but itís not protected from estate recovery. If your mother has a home, then itís almost always best to shelter it in an irrevocable trust that will allow her to receive benefits (such as rental income to help pay for her board and care home) but also protects the home from estate recovery, probate in the courts. A properly prepared irrevocable trust will also ensure that your motherís home will get an increased cost basis on her death so the home could then be sold without having to pay capital gains tax.
What everyone should understand about long term care is that there is almost always something that can be done to help shelter a loved oneís home and other assets from the cost of his or her care. You, and anyone in a similar situation, should consult with an attorney who is experienced in Medi-Cal work.
Len & Rosie
Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at www.lentillem.com. Len also answers legal questions each weekday, Noon-1 p.m. and Sundays, 4-7 p.m. on KGO Radio 810 AM.