In qualifying for Medi-Cal benefits to help pay for nursing home costs, the applicant must pass two tests: income and assets. We will cover the Asset Test below.
There are three types of assets: countable, exempt, and unavailable. Countable assets include accounts such as, but not limited to, checking accounts, savings and money market accounts, CD’s, life insurance cash value, annuities, mutual funds, a vacation home, other real property other than the family home, and motor vehicles other than one car. Eligibility for benefits is based on countable assets.
A little known fact is that assets are treated differently depending on if it is for pre-approval or post approval. For a married couple, all countable assets are combined for qualification regardless of whose name is on the account. For a single person, if the applicant’s name is on the account, then 100% of the account counts regardless of how many other names, such as a son or daughter, are on the account.
EXEMPT AND UNAVAILABLE ASSETS
Exempt assets don’t count for qualification but may be subject to Recovery after death. An example of an exempt asset is the family home regardless of value. Another example is an irrevocable pre-need account purchased through a mortuary like Fukui or Kubota-Nikkei.
An example of an unavailable asset is the IRA(s) of the applicant if a required minimum distribution or periodic income is being taken. The spouse’s retirement accounts don’t count at all regardless whether or not an income is being taken. The income is, however, counted as income.
The IRA(s) cannot be recovered against if there is a beneficiary on the account. However, if there is no beneficiary and the account is paid to the estate of the decedent at death, the account is subject to Recovery claim by the State.
MAXIMUM COUNTABLE ASSETS
For 2016, a single person is allowed to have up to $2,000 in Countable Assets and, if one spouse is applying, a married couple can have up to $121,220 in Countable Assets. If you are Japanese American, there is an additional $20,000 exemption if you can prove that you received redress payment for internment during World War II.
If redress was received, a single person can have up to $22,000 in Countable Assets and, if both spouses received redress payments, a couple can keep up to $161,220 in Countable Assets.
An important point to remember is that this is for qualification only. Any assets in the Medi-Cal beneficiary’s name at time of death is considered their estate at time of death and is subject to Recovery by the State. There are simple strategies to avoid Recovery which will be discussed in a consultation.
Let’s take a look at a typical husband and wife example. Husband is age 75 and has just entered a Medi-Cal certified long-term care facility with Alzheimer’s. They own a home valued at $600,000, have $75,000 in bank accounts and $60,000 in a mutual fund. Both received redress payment for internment during WWII. He has an IRA rollover account valued at $400,000 and his wife, age 69, has an IRA valued at $50,000.
Believe it or not, the husband can qualify for Medi-Cal benefits. Even though the total value of their assets is $1,185,000, they only have $135,000 in Countable Assets. Which consists of $75,000 in the bank and $60,000 in the mutual fund. They are allowed to have a maximum of $161,220 in Countable Assets, $121,220 plus $40,000 in redress exemption.
Their home valued at $600,000 is exempt and doesn’t count for qualification. His IRA rollover account of $400,000 is unavailable and doesn’t count because he is 75 years old and is getting his Required Minimum Distribution. Her $50,000 IRA also doesn’t count.
Therefore, it is important to know that some things count and some things don’t when it comes to Medi-Cal qualification. Do not automatically assume that you don’t qualify. We will do an assessment to determine this for you.