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Community Spouse Login American

VIEWS: 5 PAGES: 37

									  Long Term Care
 Medi-Cal Eligibility
  After the Deficit
Reduction Act of 2005
            Presented by:

        Dennis M. Sandoval,
    Certified Elder Law Attorney
Dennis M. Sandoval
 Specializes in planning for seniors and the disabled
 Dennis is the sole attorney in California that is a Certified
  Elder Law Attorney (CELA) by the National Elder Law
  Foundation, a Certified Estate Planning, Trust & Probate
  Law Specialist and a Certified Taxation Law Specialist by the
  California Bar Board of Legal Specialization
 Juris Doctorate, cum laude, from Western State University
  College of Law
 Masters of Law in Taxation, cum laude, from Golden Gate
  University College of Law
 Also serves as the Director of Education for the American
  Academy of Estate Planning Attorneys
On the Internet

          Websites
 www.protect-your-wealth.com
  www.cal-elder-lawyer.com
    www.cal-special-needs-
         attorney.com
  www.life-care-planning.com
The Seminar Focus
 Existing Medi-Cal qualification rules
 Changes brought about by the Federal Deficit
  Reduction Act of 2005
 New DHS Recovery Regulations
 The Strains on the Health Care System

 State budgets for Medicaid have been hit
  hard:
   500% increase in last 26 years
   Medicaid is typically the 2nd biggest expense -
    $36 billion for 2006 / 2007 California budget
Medi-Cal
 Long Term Care Medi-Cal is
  for medically needy
   There are income and asset
    limits
                                 Qualifications:

                                 You must be:
                                 BROKE !!
Medi-Cal
  Countable Assets        Non-Countable Assets
 Assets counted for      Assets exempt from
  Medi-Cal eligibility     Medi-Cal limits
Medi-Cal
 Checking Accounts
 Money Market Accounts
 Savings Accounts
 Certificates of Deposit
 Bonds
 Stocks
 Mutual Funds
 Art and Numismatic Coins
 Real Estate Investment Trust
Medi-Cal
 Real Estate Partnerships
 Investment Real Estate
 Vacation Homes
 Deferred Fixed Annuities
 Deferred Variable Annuities
 Most Permanent Life
  Insurance
 Second Car
 Motor Home
 Recreational Vehicles
Medi-Cal
 Your Home
 Cash and savings up
  to $2,000
 Prepaid burial or
  funeral plans
 Burial Plots
 Household furniture
  and furnishings
Medi-Cal
 Permanent Life
  Insurance with face
  value of $1,500 or less
 Term life Insurance
 Musical instruments
 Wedding or
  engagement ring
Medi-Cal

   Unavailable Assets
  IRA or Retirement Plan in
   distribution mode
  Certain kinds of Immediate
   Annuities
  Certain kinds of
   promissory notes
  Assets currently being
   offered for sale at fair
   market value
Assets and Income Test – Single

 Countable Assets            Income




  No more than $2,000
                        Income over $35 goes
                        to share of cost
Minimum Assets Test – Married Couple

Countable Assets You          Countable Assets Your
     Can Keep                    Spouse Can Keep




                               “Community” Spouse:
“Institutionalized” Spouse:          $99,540
    No more than $2,000         Community Spouse
                                Resource Allowance
Minimum Income Test – Married Couple

  Married
    Community spouse is
     entitled to Minimum
     Monthly Maintenance
     Needs Allowance
     (MMMNA) of up to $2,489
Minimum Income Test – Married Couple

  Married
    Institutionalized spouse’s
     income over $35 applied
     toward share of cost
    In some cases, can petition
     to increase Community
     Spouse Resource Allowance
     (CSRA) to more than $99,540
     in order to produce MMMNA
Medi-Cal
 Transfers
    Transfers for fair market value
     not counted
 Look Back Period
    Normally – 30 months (3 Years
     under federal law)
    Trust – 5 years
 Penalty Period
   Lose one month of eligibility for
    every $5,031 transferred
Medi-Cal Fraud

                 Send Granny to Jail
            Hiding assets will subject
             you to:
               Civil Fines
               Criminal Penalties
Deficit Reduction Act

 Look Back Period
    Increased to 5 years for all
     transfers
       DRA § 6011(a)
    Phase-in of 5 year lookback
       Not 5 years until 2/8/2011 at
        the earliest – probably a later
        date in California
Deficit Reduction Act

 Penalty Period
   Doesn’t begin to run until
    institutionalized spouse is
    “otherwise” eligible for Medi-Cal
    coverage
      DRA § 6014(b)
Deficit Reduction Act

 Penalty Period
    Must an individual actually be residing
     in nursing home to start penalty?
       Don’t know, but hopefully not –
           Residing in nursing home
           Receiving institutionalized
             services equivalent to those in
             nursing home
           Receiving home / community
             based services through a waiver
             program
Deficit Reduction Act

 No More “Rounding Down” of
  Penalty Period
   DRA § 6016(a)
   California currently rounds down,
    i.e. transfer of $5,031 or less
    results in no penalty being
    imposed; transfer of $15,000
    results in 2 month penalty
    ($15,000 / $5,031 = 2.98, rounded
    down to 2 months)
Deficit Reduction Act
 No more “stacked gifting” –
  multiple gifts must be
  accumulated
    DRA § 6016(b)
    California currently allows
     “stacked gifts” – although case
     workers don’t like them
    Example – Gifts of $10,000 each
     to ten different individuals all in
     the month of June would result in
     only one month of ineligibility
Deficit Reduction Act

 Immediate Annuities
    Must name the state of California
     as the beneficiary after the death
     of the Medi-Cal applicant
       DRA § 6012
    This has been the law in
     California since September of
     2004
Deficit Reduction Act

 Immediate Annuities
    Irrevocable
    Actuarially sound (as determined
     by Chief Actuary of SSA)
    Equal payments, no balloon
     annuities
    For transactions occurring after
     February 8, 2006
    Exceptions for annuities held by
     retirement plans and IRAs
Deficit Reduction Act

 Promissory Notes, Mortgages and
   Loans
    Actuarially sound (as determined by
     Chief Actuary of SSA)
    Fully amortized during required term, no
     balloon payments
    Prohibits use of SCINs or PATs that
     have a self-cancellation feature at death
 Value for purpose of transfer penalty
   is outstanding balance of note if all
   three requirements not met.
Deficit Reduction Act
 Equity in home limited to
  $500,000
    Can be increased to
     $750,000 with legislative
     action
       DRA § 6014
Deficit Reduction Act
 Equity in home limited to
  $500,000
    Does not apply where:
       Spouse
       Child under age 21
       Blind child
       Disabled child
    living in the home
Deficit Reduction Act
 Equity can be reduced by:
     Home Equity Loan
     Reverse Mortgage
     Demonstrated Hardship waiver
 Effective January 1, 2006
 Indexed for inflation starting
  in 2011
 California DHS says ignoring
  application until regulations
  can be drafted
Deficit Reduction Act
 Equity can be reduced by:
    Home Equity Loan
    Reverse Mortgage
    Demonstrated Hardship waiver
 Effective January 1, 2006
 California DHS says ignoring
   application until regulations
   can be drafted
Deficit Reduction Act
 Must use “Income First”
  Rule when attempting to
  increase Community
  Spouse Resource
  Allowance (CSRA) over
  $99,540
    DRA § 6013
Deficit Reduction Act



               Entrance fees paid to
                Continuing Care
                Retirement
                Communities may be
                considered
                Countable Assets
                  DRA § 6015(g)
Deficit Reduction Act

               Citizenship
  Medi-Cal applicants will be required to
   prove U.S. citizenship in order to enroll or
   renew eligibility for Medi-Cal
     DRA § 6036
All County Welfare Directors Letter

       ACWDL 06-12 (April 12, 2006)

 Requires ALJs to apply
  “income first” rule to
 Requests for Increase in
 the Community Spouse
Resource Allowance made
   after March 1, 2006
DHS Recovery Regulations
    Recovery – the new Estate Tax on
           the Middle Class
   Department of Health
  Services will attempt to
  recover the amount of
  Medi-Cal benefits paid
from decedent, spouse or
   in some cases, other
      family members
DHS Recovery Regulations


The Department of Health
Services has issued new
recovery regulations that
amend California Code of
  Regulations §§ 50961,
    50962, and 50966
DHS Recovery Regulations


   DHS recently removed
     proposed language
regarding recovery against
  life estates and lifetime
       rights to occupy

								
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