Medi-Cal vs. Medicare

What is Medicare?

Medicare is a federal insurance program paid out of Social Security deductions. Anyone over 65 who has made Social Security contributions is entitled to Medicare benefits. Disabled workers are eligible for Social Security disability benefits for at least two years.

With regards to providing benefits for long-term care, Medicare only pays for "skilled nursing care” and does not pay for “custodial care.” Medicare is not a suitable resource to pay for any substantial nursing home costs because the average stay under Medicare is only 24 days.

What is Medi-Cal?

Medi-Cal is a combined Federal and California State program designed to help pay for the medical care of low-income persons and those individuals receiving public assistance. Because Medi-Cal recipients may also receive Medicare, these two programs confuse many people. However, the Medi-Cal program is not related to the Medicare program. Rather, Medi-Cal is a needs-based program and is funded jointly with state and federal Medicaid funds.

What are the Medi-Cal Eligibility Requirements?

Those individuals who receive Supplemental Security Income (SSI) are automatically eligible for Medi-Cal. However, individuals who are ineligible for public benefits due to their income level may also qualify as “medically needy” if their income and resources are within the Medi-Cal limits (the current resource limit is $2,000 for a single individual). This includes:

Low-income persons who are 65 or over, blind, or disabled may qualify for the Aged and Disabled Federal Poverty Level Program
Low-income persons with dependent children
Children under 21
Pregnant women
Indigent adults in skilled nursing care facilities

When Should Someone Apply for Medi-Cal?

Medi-Cal pays for healthcare services that are determined to be “medically necessary”. Individuals who seek the help of an estate planning attorney for Medi-Cal issues typically want to qualify an elderly parent of other loved one for Medi-Cal to help pay for their long-term care in a skilled nursing facility. The cost of nursing home care will be covered if the Medi-Cal applicant meets income/resource requirements.

Nursing home care is covered by Medi-Cal if there is prior authorization from the physician/health care provider. Residents are admitted on a doctor's order and their stay must be “medically necessary”. They are allowed to keep $35 of their income as a personal needs allowance. Residents with no income may apply for the Supplemental Security Income/State Supplemental Program (SSI/ SSP), and, if eligible, they will receive a payment of $50 as a personal needs allowance.

Medi-Cal Resource Limitations

To qualify for Medi-Cal the recipient must demonstrate that he or she has limited resources available. Remember that Medi-Cal is available to low-income individuals. The property limit for one person is $2,000. However, in calculating that $2,000 limit, Medi-Cal classifies property as “exempt” and “non-exempt.” Exempt property is not included in determining eligibility; non-exempt property is included. If the applicant has more than $2,000 in non-exempt property, he or she will not be eligible, unless the property is spent down for adequate consideration before the end of the application month.

The following property is generally exempt and, therefore, not counted in determining eligibility:

The Home
Other Real Property with a net value of $6,000 or less if the beneficiary is “utilizing” the property, i.e., receiving yearly income of at least 6% of the net market value.
Household Goods and Personal Effects
Jewelry
Cars/Motor Vehicles: one car is generally exempt if used for the benefit of the applicant
Whole Life Insurance with a total face value of $1,500 or less
Term Life Insurance
Burial Plots
Prepaid irrevocable Burial Plan of any amount and $1,500 in designated burial funds. Designated funds must be kept in a separate account.
IRAs and Work-Related Pensions
Non Work-Related Annuities
Cash Reserve up to $2,000 in liquid assets, e.g., savings, checking, or excess cash surrender value of life insurance
Community Spouse Resource Allowance (CSRA): The available CSRA is currently $109,560 (as of 1/1/2009). The CSRA represents the amount that the well-spouse of a Medi-Cal recipient living in a nursing facility may keep without jeopardizing the eligibility of the ill-spouse needing long-term care.

I assist clients with their Medi-Cal planning needs and strongly advise clients to schedule a free initial consultation to:

Determine whether someone they love can qualify for Medi-Cal
Understand what actions they can take to avoid Medi-Cal reimbursement claims after benefits are received, and
Discuss available alternatives to applying for Medi-Cal benefits.

Medi-Cal qualification is a very detailed area of law and cannot be adequately covered in a short explanation. More information is offered in the Elder Law Resources listed on this site, such as the NAELA and CANHR websites. I encourage using these resources to learn more about Medi-Cal qualifications and California's procedure on Medi-Cal claim reimbursement.