Q. I heard that the Medi-Cal rules to qualify for a long-term care subsidy are about to change. This would be very important to us, as my husband, now aged 85, will soon need care in a nursing home, and we are very concerned about the cost. Do you know anything about this?
A. Yes, indeed, and you heard correctly! The changes coming are probably the most dramatic since the Medicaid program was first established under President Lyndon Johnson back in 1965. A bit of background may be helpful:
Historically, Medicaid, which we call “Medi-Cal” in California, has been a healthcare program for “the poor”, defined over the years as an individual with less than $2,000 in savings or other countable assets. That very modest number has not changed over the years.
However, if that individual is married, and has a spouse living at home in the community (a “Community Spouse”), a 1989 amendment to the Medicaid Act recognized the need for a Community Spouse Resource Allowance (“CSRA”), to avoid the impoverishment of the spouse at home. That CSRA amount has adjusted over the years based on inflation, and the current amount is $137,400. So, under today’s Medi-Cal rules, a married individual with a Community Spouse could qualify for a Medi-Cal subsidy if, together, their savings and other countable resources do not exceed the sum of $2,000 + $137,400 = $139,400.
The big change coming is the increase, and ultimately elimination, of the resource cap for the individual seeking a Medi-Cal subsidy. Under California legislation signed by Gov. Newsom as part of the 2021 Budget Bill (“AB 133″, at Section 364), the resource caps are set to be modified, and ultimately eliminated, in two stages, as follows:
1) Stage #1: Effective July 1, 2022, just a few short weeks away, the $2,000 individual resource ceiling will increase from $2,000 to $130,000. In addition, another $65,000 will be allowed for each household member, up to a total of 10. However, if that individual is married and has a Community Spouse who is not, herself, seeking Medi-Cal, then the couple’s combined resource allowance will be the sum of the following: $130,000 + $137,400 = $267,400.
The rules are a bit complex in terms of who qualifies as a Community Spouse (and is thereby entitled to the full CSRA of $137,400), but in our practice we have found that in most cases the spouse at home will so qualify, provided that he/she is not also seeking a Medi-Cal subsidy.
Stage #2: The California legislation proposes that on January 1, 2024, the resource caps will be eliminated entirely, subject only to Federal approval! On July 14, 2023, the Federal Government gave its approval to the California State Plan. Thus, as of January 1, 2024, California will then be the only state in the entire country that will have completely eliminated the long-standing resource test to qualify for a Medi-Cal subsidy. See “Update”, below, for the link to the Federal CMS approval letter.
However, the following aspects of the Medi-Cal rules will not change:
1) The rules pertaining to the treatment of INCOME. Currently income is considered in determining whether an individual has a Share of Cost (“co-pay”), and is also a determinant for eligibility for certain Medi-Cal programs, such as the Aged & Disabled Federal Poverty Level Program, and the Assisted Living Waiver Program;
2) The rules pertaining to ESTATE RECOVERY. Under current rules, California may seek to recover the benefits paid, following the death of a Medi-Cal beneficiary, if his/her estate goes through a full probate, unless statutory exceptions apply, such as survival by a spouse or a disabled child. Note: assets held in a Living Trust typically do not require a probate and are therefore usually protected from estate recovery.
3) The rules pertaining to the making of GIFTS.
Caution: For those Medi-Cal recipients who are on other programs, such as the Supplemental Security Income Program (“SSI”), note that those rules will not change and $2,000 continues to be the resource ceiling for an individual receiving SSI. Thus, an individual on both SSI and Medi-Cal, may be obliged to continue to keep his/her resources below the $2,000 cap.
These Medi-Cal changes are dramatic, and I predict that California may ultimately become a Mecca for the relocation of elderly parents who are now residing in other states. Whether easier access to a Medi-Cal subsidy will impact the quality of care in long-term care facilities, only time will tell.
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Note: the above discussion applies only to those persons over 65 years of age (and younger individuals on MediCARE due to a qualifying disability), the so-called Traditional Medi-Cal population (aka the Non-MAGI Population), but not to younger individuals who do not have a qualifying disability and are eligible for Medi-Cal pursuant to the “Patient Protection and Affordable Care Act”, based upon their modest incomes (i.e. the so-called “MAGI Population”). For this younger group, eligibility is based upon their “Modified Adjusted Gross Incomes”, alone, without regard to their resources). By raising and ultimately eliminating the resource requirement for the older, NON-MAGI population, AB 133 proposes to bring the (older) Non-MAGI population into line with the (younger), MAGI Population.
Update: On July 14, 2023, the Federal Center for Medicare and Medicaid Services (“CMS”) approved the California State Plan to completely eliminate the asset resource ceiling for most Medi-Cal programs. Here’s the link to the CMS letter of approval