Q. My wife is being cared for in a nursing home and the cost is running about $9,500 per month. I see our life savings and financial security dwindling rapidly, and I am concerned about my own financial future. I was thinking about taking steps to qualify her for a Medi-Cal subsidy, but I wonder whether Medi-Cal planning is legal? Do you have any thoughts on that?
A. Indeed I do. We are sometimes asked whether it is ethical, or even lawful, for an individual or couple to take planning steps in order to qualify for a Medi-Cal Long-Term Care subsidy or other government benefits. We believe that the answer is an unequivocal, YES.
In our view, Medi-Cal planning is similar to tax planning, albeit for the middle class. The wealthy plan their affairs and design their business strategies in order to minimize tax. They hire very sophisticated financial advisors, accountants and attorneys to assist them in their effort, and their advisors’ success is applauded and often highly compensated.
When you think about it, this undertaking is really no different than the effort on the part of the middle-class to likewise plan their affairs in order to qualify for government benefits. The planning in each case is made with respect for the law, but just involves different populations. Indeed, both efforts impact the public treasury. To be sure, the impact of tax planning is greater by far.
In a word, planning to accelerate eligibility for Medi-Cal is as ethical and legal as planning to avoid taxes.
Back in 1988, Congress passed the Medicare Catastrophic Coverage Act (“MCCA”), which included special provisions to avoid Spousal Impoverishment, and which remain in effect today. These provisions have been designed to protect the couple’s savings (up to a designated limit, indexed to inflation), as well as their income, home and other assets so as not to impoverish the At-Home spouse, or other dependents, when a family member needs nursing care. MCCA also authorizes a judge to expand those protections even further where the circumstances warrant.
In California, these protections have been expanded still further. For example, the law here requires that the Medi-Cal workers give out written instructions to applicants advising that strategies may be lawfully employed to protect the home from a later Medi-Cal payback claim. Implementing these strategies is usually easier where the individual or family engages the services of an Elder Law Attorney.
Further, legislation is now effective in California to automatically protect the home of a surviving spouse from Medi-Cal “pay back”. The public policy supporting this legislation is favored almost unanimously by the legislature and by most members of the public. Governor Jerry Brown signed this legislation on June 27, 2016, as SB 833 (part of the annual budget bill), and it became law on January 1, 2017). For more on this important development, click here.
There is the further matter of a health care system (Medicare) that discriminates against paying for certain chronic illnesses. For example: If someone on Medicare has a serious heart, lung or brain condition, Medicare will pay for the expensive treatment, including surgery and hospitalization necessary to treat that condition. By contrast, if a senior is unlucky enough to develop Alzheimer’s, Parkinson’s or another chronic condition, the care associated with those conditions is typically not covered. In our view, this discriminatory health care payment system is unfair as a matter of social policy, especially since the individual needing care did not “choose” the uncovered medical condition.
In short, so long as steps are taken in accordance with the rule of law, we see nothing wrong (and, in fact, everything “right”) in planning to secure government subsidies, including Medi-Cal, in order to enable you and other seniors to live with dignity and without fear of impoverishment.