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The California Department of Health Care Services' Medi-Cal Eligibility Branch has issued the Spousal Impoverishment Limits for 2010. The Community Spouse Resource Allowance (CSRA) is $109,560 and the Minimum Monthly Maintenance Needs Allowance (MMMNA) is $2,739.
The resource limits and income provisions work in the following way for a married couple when one spouse is in a nursing home and the other spouse is still at home or in the community. The spouse at home may keep up to $109,560 (CSRA) in resources (property and other assets) while the institutionalized spouse may keep an additional $2,000. These amounts are not subject to spend down requirements.
Single individuals in long-term care or remaining at home and getting Medi-Cal are permitted to retain $2,000 in addition to any other exempt assets.
The spouse at home is allowed to keep all of the income received in his or her name, (referred to as the "Name on the Check Rule") regardless of the amount. If that amount is below $2,739 (MMMNA), the institutionalized spouse may allocate income to the at-home spouse to bring their income up to the $2,739 limit. The spouse in the nursing home is permitted to keep $35.00 in monthly income for their personal needs.
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In this instance "transfer" means an outright gift or a "sale" made at less than "fair market value." If such a transfer of property is made, Medi-Cal may calculate the period of ineligibility for nursing facility level of care. If a period of ineligibility results, the length of the ineligibility period is based on the net fair market value of the transferred property. The period of ineligibility is calculated by first determining the net fair market value of transferred property which would have resulted in excess property, had an application for Medi-Cal been submitted at the time of the transfer and the property retained by the Medi-Cal applicant. The amount of excess property is divided by the monthly average private pay rate and rounded down to the nearest whole number. For 2008 the average private pay rate used by Medi-Cal to calculate the period length is $6,000 per month. The period of ineligibility for nursing facility level of care limited to no more than 30 months from the month of the transfer. Sound confusing? Let's try a very simplified example.
Aunt Millie is single and in excellent health. She has a two-year long-term care insurance policy. Aunt Millie "sells" the only non-exempt property she owns to her beloved nephew for $1.00, a dilapidated, unencumbered warehouse. Three months later, Aunt Millie is injured and needs long-term care. Her insurance benefits are exhausted in twenty-four months and Aunt Millie applies to Medi-Cal to receive benefits. The "sale" of the property to her nephew is declared on her application. An appraiser determines the fair market value of the property at the time of transfer was $200,000. Her nephew is unable to return the property since the property has been sold.
Because it has been 27 months since the transfer, Medi-Cal may determine a period of ineligibility for nursing facility level of care. Although Aunt Millie may qualify in general for Medi-Cal, because of the transfer of property, she may be unable to receive Medi-Cal assistance to pay the costs of the services in the nursing home. Medi-Cal first subtracts the $2,000 Aunt Millie is allowed to retain under Medi-Cal, and then divides the remaining $198,000 by the $6,000 per month rate ($200,000 - $2,000 = $198,000/$6,000 = 33 months*.
Since 27 months has already passed since the transfer, Aunt Millie, will have to wait four months (months 27 through 30 inclusive), before the nursing home will be reimbursed by Medi-Cal. During this time, she will have to pay the nursing home out of her own pocket. Because none of us can know the future, transferring property is a very risky way of attempting to establish eligibility for Medi-Cal benefits. If you want to help people protect what it has taken them a lifetime to accumulate, while providing them more options for care, consider selling them a Partnership approved long-term care insurance policy.
*NOTE: The current look-back period is 30 months.
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To access of list of the most commonly asked questions and scenarios regarding Medi-Cal Asset Protection and its affect on the Eligibility and Estate Recovery processes, please click here.
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