In this continuing series of posts we will focus on Medi-Cal for our over-65 clients who need assistance with long-term care. Here, we discuss the analysis we go through after gathering information in our first appointment with our clients.
What’s Next? Analyze Client’s Eligibility
By the end of our initial appointment we will have a good idea of what the client’s medical and cognitive states are, what estate planning has been done, what the assets and income are, what kind of assistance the client is hoping to get and how soon assistance might be needed. The next step is to analyze all of this information to come up with a plan. This analysis requires a careful consideration of the Medi-Cal eligibility rules relating to income and assets. We will start here with a brief discussion of those rules.
Income must be below a certain threshold to be eligible for Medi-Cal. That threshold is “countable income” which is calculated from income and certain expenses. Before submitting our client’s Medi-Cal application we want to make sure his countable income is low enough to qualify for Medi-Cal. Allowable countable income is different for community-based Medi-Cal programs than for services in a skilled nursing facility.
Countable income is calculated as follows:
Gross monthly income
– $20 from unearned income (social security, pension, IRA distributions, interest, dividends, rent)
– Health insurance premiums
– $65 from earned income (wages)
– Half of the remaining earned income
– Any unused unearned income deduction (the $20)
– Work expenses incurred as a result of disability (transportation, medical devices, special equipment)
= Countable Income
Most of our clients over 65 are no longer working so the discussion of earned income doesn’t come up often. Here are some examples that are fairly typical illustrations of the income formulas.
Example: Single With No Share of Costs
Wendy is retired and her income is $1,000 per month from Social Security plus $300 per month in required minimum distributions from her IRAs. Her Medicare Part B premium is $134. Going back to the above formula:
Gross income = $1,300 (Social Security plus IRA)
– $20 from unearned income = $20
– Health insurance premium = $134
– $65 from earned income = $0 (Wendy has no earned income)
– Half of remaining earned income = $0
– Any unused unearned income deduction = $0
– Work expenses= $0
= $1,146 countable income
Wendy’s countable income will qualify her for community-based Medi-Cal without a Share of Costs. If her countable income was greater than $1,242 she might either do some planning to reduce her countable income or see if she can qualify for Medi-Cal with a Share of Costs. Share of costs is what Wendy would have to contribute to her care each month, like a deductible. Below is an example of a calculation of countable income with a Share of Costs:
Example: Single With Share of Costs
Henry is retired and receives $1,650 per month from Social Security plus $100 from a pension. Medicare Part B costs $134.
Gross income = $1,750
– $20 deduction from unearned income = $20
– Health insurance premium = $134
– Remaining Deductions = $0
= $1,596 countable income
Henry’s countable income is $354 too high for Medi-Cal without a Share of Costs, but Henry may want to receive Medi-Cal with a Share of Costs. Recipients with a Share of Costs are permitted a deduction for a Monthly Needs Allowance (MNA) which depends on the size of their household. For a single person with no dependents the MNA is $600. If Henry was married his MNA would be larger because his needs for two people would be greater. The MNA for two adults is $934. In Henry’s example, his Share of Costs is:
$1,596 = Countable Income
– $600 = MNA
$996 = Share of Costs
This means Henry would be required to pay $996 per month toward his care. He might prefer instead to reduce his countable income from $1,596 to $1,242, the difference being $354, and have no Share of Costs. In Henry’s case, all his income is unearned and he really can’t reduce it. What he can do is increase his deductions, by purchasing additional health insurance. If he can find a way to spend $354 per month on Medicare Part D (Prescription drug) or a supplemental health insurance policy he would get the same Medi-Cal services as he would by paying his $996 Share of Cost, plus he would have more health insurance coverage.
In our next post we will continue our discussion of the income requirements, this time in the context of Medi-Cal for nursing home care.