For the remainder of 2023, the old planning strategies for qualifying for Medi-Cal long-term care benefits are still viable. But, if qualification is not needed until 2024, it may be best to wait until January 1, 2024 to apply for benefits. The reason being that the asset limit for qualifying for Medi-Cal long-term care benefits goes away and the concern will be looking at income because the share of cost requirement remains. If someone needs to qualify for Medi-Cal long-term care benefits before the end of 2023, this is a quick summary of some of the things you need to know.
The non-exempt asset limit was raised last year to $130,000. This is a big increase from the previous non-exempt asset limit of $2,000. The Community Spouse Resource Allowance is $148,620 for 2023 and the Maximum Monthly Maintenance Needs Allowance (MMMNA) is $3,716. This means that a couple with one spouse or registered domestic partner who needs to be admitted to a skilled nursing facility, have less than $278,620 in non-exempt assets, and the well spouse receives $3,716 or more a month in income, then the ill spouse can qualify for Medi-Cal long-term care benefits. If the well spouse receives less than $3,716 a month in income, then they can file a court petition or for a fair hearing to increase the asset level to cover the short fall in the monthly income.
If the value of the non-exempt assets is over the limit, then stacked gifting needs to occur to reduce the non-exempt asset level down to $130,000 for a single person or $278,620 for a couple. Stacked gifting is a process of gifting non-exempt assets (i.e., brokerage account) to anyone in a specific amount over a specific period of time to reduce the period of ineligibility for Medi-Cal long-term care benefits. The amount is based on the Average Private Pay Rate (APPR) that the State publishes each year. For 2023 that amount is $11,576. The current Medi-Cal regulations allow you to gift up to 1.9 times the APPR ($21,994.40) from each account to each person each day and the period of ineligibility will be only in the month those gifts are made. If the daily gift to each person is more than $21,994.40, then that will create a period of ineligibility for more than the month of the gift and the number of months depends on the total gift divided by the APPR.
Here is an example of how stacked gifting works. Suppose that Zach wants to apply for Medi-Cal long-term care benefits to cover his skilled nursing facility cost in September. For simplicity’s sake, let’s say that Zach’s assets consist of his car and $500,000 in cash in three separate accounts. Zach can gift his care to whomever and not be concerned about ineligibility regardless of value because his car is an exempt asset. But Zach’s bank accounts are over the $130,000 asset limit so he needs to reduce those accounts down by $370,000. Zach has two kids and one grandchild that he is comfortable giving the money. Let’s say that the $370,000 is divided between the three accounts with $200,000 in one account, $100,000 in another account, and $70,000 excess in the last account. Zach goes to the bank on August 1 and obtains a total of nine cashier’s checks all in the amount of $21,994.40 – three checks from each account made out separately to the two children and one grandchild. Each account will be reduced by $65,983.20 on August 1. On August 2, Zach goes back and gets more cashier’s checks except he only needs to get one in the amount of $4,016.80 for the smaller account that had an excess of $70,000 ($70,000 – $65,983.20 = $4,016.80) and two checks for $17,008.40 ($100,000 – $65,983.20 = $34,016.80/2 = $17,008.40) from the account that had $100,000 in it. On August 3, Zach gets six cashier’s checks from the remaining account each in the amount of $21,994.40 which will leave $2,050.40 in the account which Zach can gift on August 4. Zach’s next step is to file for Medi-Cal long-term care benefits on September 1 and in his application, he details these daily gifts to the three people from the three separate accounts in the specific amounts. This will only make him ineligible for benefits for the month of August, but he will qualify in September because his remaining assets are $130,000.
A person can gift exempt assets (i.e., personal residence), regardless of value, without stacked gifting and not create periods of ineligibility. While these gifts are still reported when applying, they are not considered when determining ineligibility.
There are specific strategies that should be used when doing stacked gifting, so please speak with an attorney. There are also other concerns such as tax consequences when gifting appreciating property that need to be considered.
An excellent resource regarding Medi-Cal long-term care qualification and recovery is the California Advocates for Nursing Home Reform website. It has a fact sheet – http://www.canhr.org/factsheets/medi-cal_fs/html/fs_medcal_overview.htm – that is helpful to understand all the issues surrounding qualification and recovery.