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Kevin Yeam: Plan for long-term care and estate-asset protection

It's The Law

Posted: April 23, 2009 9:06 p.m.
Updated: April 24, 2009 4:55 a.m.
People are living longer than ever.  As a result, they are incurring more expenses related to their older years (nursing homes averaged about $5,500 per month per person).

Those expenses can quickly deplete their estates.  The laws and government involvement in long-term care are very complex.  

Therefore, it is important to plan ahead and seek qualified legal advise.

Medicare is a federal insurance program paid out of Social Security deductions. All persons over 65 who have made Social Security contributions are entitled to the benefits.

Medicare is not based on financial need.

Medicare does not pay for all medical expenses. Usually it must be supplemented with private insurance — called “medigap” insurance — or consumers can enroll in an HMO plan that contracts with Medicare.

After three days of prior hospitalization, Medicare will pay up to 100 percent for the first 20 days of skilled nursing care. For the 21-100 days, the patient will pay a co-payment.

The premiums and copayments are increased every year. There will be no Medicare coverage for nursing home care beyond 100 days in any single benefit period.  

It should be noted that Medicare only pays for skilled nursing care but does not pay for what’s called custodial care.

The average stay under Medicare is usually less than 24 days.

Thus, few can look to Medicare to pay for any substantial nursing-home costs.

Medi-Cal is a combined federal and California state program designed to help pay for medical care for low-income persons and is not related to the Medicare program.  

This includes: (a) low-income persons who are 65 or over; those who are blind or disabled may qualify for the Aged and Disabled Federal Poverty Level Program; (b) medically indigent adults in skilled nursing or intermediate care, or those who qualify for Medi-Cal funded home and community based option programs.

Medi-Cal pays for medically necessary health-care services, including some prescriptions, physician visits, adult day-health service, some dental care, ambulance services, some home health, X-ray and laboratory costs, orthopedic devices, eyeglasses, hearing aids, some medical equipment, etc.

Nursing-home care is covered if residents are admitted on a doctor’s order and if the stay is deemed medically necessary.  

Residents are allowed to keep $35 of their income as a personal-needs allowance.

Individuals whose net monthly income is higher than the state payment rate may qualify for the program if they pay or agree to pay an amount equal to the difference between what’s called  the “maintenance need standard” and the individual’s net non-exempt monthly income.

To qualify for Medi-Cal, the recipient must demonstrate that he or she has less than $2,000 of non-exempt property, unless the excess exempt property is spent down for adequate consideration before the end of the application month.

Exempt property generally includes: principle residence, very limited income property, heirloom or under $100 value jewelry, one vehicle, whole-life insurance under $1,500 value, household goods and personal effects, term life insurance, burial plots, a prepaid irrevocable burial plan of any amount and $1,500 in designated burial funds, IRAs and work-related pensions, and cash reserves of less than $2,000.

Giving away non-exempt resources may render a person ineligible for Medi-Cal, but only apply if a Medi-Cal applicant enters a nursing home.

The transfer rules are triggered when a person enters a nursing home and applies for Medi-Cal, as well as any assets transferred within the 60 months prior to the date of the application.

California law allows the community spouse to retain a certain amount of otherwise countable resources available to the couple at the time of application.

This is called Community Spouse Resource Allowance and it increases every year according to the Consumer Price Index.

The 2008 CSRA is $104,400.  California law allows the community spouse to retain a minimum monthly maintenance needs allowance of $2,610 from community or separate property income.

Medi-Cal will submit a claim against the remaining exempt assets of the applicant and the spouse after their death in the amount of the benefits paid by the Medi-Cal plan.

Kevin Yeam is an attorney in Santa Clarita.  He can be reached at (661) 255-9500.  His column represents his own views and not necessarily those of The Signal.  “It’s the Law” appears Fridays and rotates between members of the Santa Clarita Valley Bar Association.  Nothing contained herein shall be or is intended to be construed as providing legal advice.


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