When applying for Medi-Cal assistance for long-term care in a skilled nursing facility, our clients must disclose any transfers made in the prior 30 months to another person for less than fair market value. Because Medi-Cal is a program meant to help people with limited resources, Medi-Cal will presume that such transfers are made for the purpose of reducing resources and thereby qualifying for Medi-Cal. The Medi-Cal applicant who transfers assets for the purpose of becoming eligible for Medi-Cal will be penalized. (This does not mean they will not receive Medi-Cal benefits. It simply means transfers must be done carefully, in consultation with a knowledgeable attorney.)
What happens sometimes in families, is a parent will transfer money to a child, at the time of an unexpected disabling event, such as a stroke or fall, so that the child can easily pay for the parent’s expenses (out of the parent’s money, which is now in the child’s name). When the parent later becomes so disabled that he/she requires skilled nursing care and applies for Medi-Cal to help pay for it, the earlier transfer to the child may cause trouble for the parent’s eligibility. If the child did not save receipts showing that all of that transferred money was actually spent for the parent, the parent’s Medi-Cal eligibility could be delayed due to a penalty.
In a recent New Jersey case, a 103-year old Medicaid (what we in California call Medi-Cal) applicant got a penalty of almost a year for a transfer of $57,000 she had made to her niece. This niece had kept the transferred money in a separate account and had a detailed spreadsheet showing all of the expenses she had paid for her aunt out of the account. However, the niece had no receipts to support the figures in her spreadsheet. The court ended up holding that the penalty for the transfer, 334 days of ineligibility, was appropriate.
While tedious, keeping documentation of all expenses paid following a transfer of wealth may save a client or family member from suffering a significant penalty when applying for Medi-Cal benefits. This chore may provide the convincing proof needed to defeat the presumption of an improper transfer. Many of us will eventually need care in our elder years, thus preparing for the inevitable is a sensible undertaking. While an arduous task, collecting and maintaining necessary documentation – as if you are always preparing for trial – may provide the security and peace of mind that a future Medi-Cal application will not result in a determination that a transfer made in recent years was a dishonorable attempt to meet its qualifications.
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If you’re someone who needs to include Medi-Cal planning in your estate plan, we can help. For more information on what Medi-Cal planning should look like, visit https://absolutetrustcounsel.com/practice-areas/medi-cal-planning/ for even more resources to help get you started.