Overview of Medi-Cal for Long Term Care

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Medi-Cal vs. MedicareTransfer/Gifting Assets
Medi-Cal EligibilitySpousal Impoverishent Laws
Monthly Resident Cost (formerly Share of Cost)Family Allocation
What Does Medi-Cal Cover?Medi-Cal Recovery
Assets

A. Medi-Cal vs. Medicare

Medicare Coverage of Skilled Nursing Care
Medicare does not pay for all medical expenses, and usually must be supplemented with private insurance (“medigap”) or consumers can enroll in an HMO plan that contracts with Medicare. After 3 days of prior hospitalization, Medicare will pay up to 100% for the first 20 days of skilled nursing care. For the 21-100 days, the patient will pay a co-payment. The premiums and copayments are increased every year. There will be no Medicare coverage for nursing home care beyond 100 days in any single benefit period.

It should be noted that Medicare only pays for “skilled nursing care,” does not pay for “custodial care” and the average stay in a nursing home under Medicare is usually less than 24 days. Thus, few can look to Medicare to pay for any substantial nursing home costs.

For more information on Medicare coverage, contact your local Health Insurance Counseling and Advocacy Program (HICAP)


Medi-Cal for Long Term Care
Medi-Cal is a need-based program designed to help low-income people pay for medical care. Unlike Medicare, Medi-Cal recipients must apply and meet certain eligibility criteria to receive coverage.This factsheet focuses primarily on Medi-Cal for Long Term Care, which helps cover services in a skilled nursing facility or nursing home. For information on community-based Medi-Cal, Medi-Cal coverage for someone at home or in the community, please read CANHR’s fact sheet on Aged & Disabled, Medically Needy, and Working Disabled Medi-Cal Programs

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B. Medi-Cal Eligibility

As of January 1, 2024, Medi-Cal will no longer count assets to determine eligibility. This means that anyone, regardless of how much they own, may receive Medi-Cal benefits, including:

  • Individuals in skilled nursing or intermediate care facilities or those who qualify for home and community based services
  • People who are 65 or over, blind or disabled
  • Low-income persons with dependent children
  •  Children under 21
  • Pregnant women

SSI and other categorically-related recipients are also automatically eligible for Medi-Cal.

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C. Monthly Resident Cost (formerly known as “Share of Cost”)

Skilled nursing facility residents must agree to pay the facility a portion of their income each month. This is called the monthly resident cost and is treated much like rent. The resident is responsible for paying their monthly resident cost to the facility, and Medi-Cal will then cover the remaining costs for the month. 

The monthly resident cost is calculated by taking the individual’s gross monthly income, deducting any out-of-pocket medical premiums, and deducting the Personal Needs Allowance of $35. This is the amount that a skilled nursing resident can keep for themselves while the remainder of their income is paid to the facility. If the resident is on SSI, the personal needs allowance is increased to $50. If the resident is receiving VA Aid and Attendance benefits, they’re entitled to receive a total of $125 because they receive an additional $90 on top of the $35. 

All Medi-Cal beneficiaries who have a Medi-Cal share-of-cost of more than $500 will no longer have their Medicare Part B premium covered by Medi-Cal, it will automatically be deducted from the beneficiary’s Social Security check. This does not apply to Medi-Cal eligible nursing home residents, as their Part B premium will continue to be covered by Medi-Cal.

Example: Medi-Cal in a Nursing Home

Seth enters a skilled nursing facility. His income is $1,800/month and pays $50 a month for a supplemental vision plan. 

      $ 1,800      Gross unearned income
           -$50      Medical premium
            -35       Personal Needs Allowance
   $ 1,715         Seth’s monthly resident cost to be paid each month to the nursing home or for medical costs not covered by Medi-Cal.

* The remaining $35 is Seth’s Personal Needs Allowance.

Other Deductions from the Share of Cost:

In addition to the “any income deduction” and the monthly maintenance need level, any monthly medical premiums can also be deducted before the monthly resident cost is determined such as your Medicare Part B premium, or supplemental vision and dental insurance. Other deductions can also be made, depending on the circumstances.

For example, under a legal settlement, Hunt v. Kizer, recipients may use old, unpaid medical bills that they have to reduce the monthly Medi-Cal resident cost. Original documentation showing the billing statement is an outstanding balance should be provided to the County eligibility worker. The documentation should include the following information: 

  1. Name and address of the provider who provided the service
  2. Name of the person who received the medical service
  3. Brief description of the medical service received
  4. A “procedure code,” which is a medical reference number associated with the service provided.
  5. Provider’s Medi-Cal Provider Identification Number or Provider License Number
  6. Date(s) the medical service was provided
  7. Date on which the bill was issued. If the bill is an unpaid, old medical bill, the billing date must be within 90 days of the date the county receives the bill. If the bill is older than 90 days, the Medi-Cal recipient can ask the provider for a more recent bill. 
  8. The amount owed solely by the individual and not subject to third party coverage.

The monthly resident cost will be adjusted to reflect the cost of the outstanding balance, which could, for example, mean no monthly resident cost until the old, unpaid bills are paid off. This is not automatic and should be discussed with the Medi-Cal county eligibility worker.

Under the Johnson v. Rank settlement, recipients may use their monthly resident cost to pay for medically necessary supplies, equipment or services not covered under the Medi-Cal program. This deduction is only applicable to long term care residents. A current physician’s prescription is necessary and must be put in the recipient’s record at the facility. This prescription must be a part of the physician’s plan of care. After a copy of the prescription and the bill is presented to the facility, the facility will deduct the cost from that month’s resident cost and bill the resident for the remaining monthly resident cost.

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D. What Does Medi-Cal Cover?

Medi-Cal pays for health care services which meet the definition of “medically necessary.” Services include: some prescriptions (although the Medicare Part D program now covers most prescriptions), physician visits, adult day health service, some dental care, ambulance services, X-ray and laboratory costs, orthopedic devices, eyeglasses, hearing aids, etc. Some services such as home health care, durable medical equipment, and some drugs require prior authorization.

Nursing home care is covered 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”. 

If the individual qualifies for Medi-Cal, they do not need private “medigap” or HMO insurance to pay for costs, though if such insurance is carried, the premiums are deducted from income when computing the monthly resident cost, and therefore costs the beneficiary nothing. If the HMO coverage includes drug benefits, maintaining the HMO coverage may become more important, as the beneficiary will continue to receive drug benefits from the HMO, which may be more comprehensive than the Medicare Part D coverage.

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E. Assets

Although assets are no longer considered for eligibility purposes, applicants must remember that income generated from assets (e.g., rental income) may be included in the monthly resident cost calculation. Medi-Cal requires applicants and beneficiaries to report income from all sources.  Income received from some assets may be counted toward the monthly resident cost, while others may be excluded from the calculation. Examples of income from some assets that would be included in the calculation include:

  • Rental property income
  • Periodic payments and required minimum distributions from IRAs, retirement plans for self-employed individuals, and work-related pension funds
  • Payments distributed from an annuity
  • Interest and dividends received from investments, savings accounts, etc.

Please see ACWDL 23-21 for a full list of countable and excluded income sources.

Income from Real Property

If a Medi-Cal beneficiary receives rental income from real property, including the principal residence, the “net” income from the property is used in determining what will be counted toward the monthly resident cost. Certain expenses are deducted from the gross rental income to determine the net income. These include taxes and assessments, interest payments (not principal), insurance, utilities and upkeep and repairs.

Upkeep and repairs are the greater of either: the actual amount expended for upkeep and repairs during the month or 15% of the gross monthly rental, plus $4.17 per month. (22 CCR §50508). Note that other calculations are used for income from rental of rooms, rental of unit(s) in a multiple dwelling unit or other dwellings on the property (22 CCR §50508).

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F. Transfer/Gifting Assets

The lookback period only applies to those applying for Medi-Cal coverage in a skilled nursing facility. A lookback period will no longer apply to transfers made on or after January 1, 2024. Transfers made prior to January 2024, may be subject to transfer penalties. Counties will review the 30 months prior to application for Long Term Care Medi-Cal services for any transfers of property, but will not penalize those transfers made from 2024 forward

A transfer of non-exempt assets can result in a period of ineligibility if the divided value of the transferred assets and the average private pay rate (APPR) is one or more months. The current APPR is $12,608 (effective January 1, 2024).

Example: Transfers made on or after January 1, 2024

Josh enters a nursing home in October 2024. He transferred $150,000 in August of 2024 to his brother. The county will not consider the months of January through October of 2024, but will review the  21 months prior to January 1, 2024 for transfers of property made during that time. Because the transfer happened in 2024, there is no transfer penalty. 

Transfers of exempt property (as per rules of the time of the transfer) would not result in ineligibility. For example, there would be no transfer penalty for someone who had $125,000 in total assets in 2023 and made a transfer of $100,000, which was under the $130,000 asset limit for that time period. 

Please note that a transfer penalty would only be applied to those entering a nursing home on Medi-Cal, and not to applicants or beneficiaries living in the community. Prior to imposing a period of ineligibility, the applicant’s case must be reviewed for “undue hardship,” by the Medi-Cal case worker and receive approval from the DHCS, Medi-Cal Eligibility Division. (ACWDL 23-28)

Example: Transfers made prior to January 1, 2024

In December of 2023, Maya cashed out her retirement account and transferred the entire $250,000 to her daughter. In June of 2024, she applies for Long Term Care Medi-Cal because she entered a nursing home. As the County will review the 25 months prior to 2024, the transfer could create a period of ineligibility. To find out the period of ineligibility, please see the calculation below: 

$250,000 (amount transferred)  $12,608 (APPR) = 19.82

Maya’s period of ineligibility will be 19 months because Medi-Cal does not count partial months. Per ACWDL 23-28, the county has to submit the period of ineligibility for approval to DHCS. DHCS will review if the period of ineligibility will impose undue hardship. 

Assets in any amount can be transferred at any time to a blind or disabled child of any age. The child’s disability must meet the requirements under the Social Security Act, i.e., the child must meet the disability requirements for SSA or SSI disability benefits. Transfers of a home or any asset to a blind or disabled child will not affect the Medi-Cal beneficiary or applicant’s eligibility. However, a transfer of liquid assets may impact the benefits of a child who is receiving SSI benefits, in which case an SSI specialist should be consulted. Assets can also be transferred at any time to a spouse without any penalties. 

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G. Spousal Impoverishment Laws

Skilled nursing residents who are married or have a registered domestic partner may be eligible for Spousal Impoverishment protections. Under Spousal Impoverishment, the spouse at home (also referred to as the “community spouse”) can keep any income received in their name without having to contribute to the institutionalized spouse’s monthly resident cost in the nursing home. For example, if the community spouse receives a monthly income of $5,000, they can keep it all without contributing to the Medi-Cal recipient’s monthly resident cost.

However, if the community spouse is low-income, California law allows the community spouse to keep a minimum monthly maintenance needs allowance (MMMNA). The current (2024) MMMNA is $3,854 and increases annually. If the community spouse makes less than the MMMNA of $3,854, they can receive an allocation from the institutionalized spouse’s income until they reach the $3,854 MMMNA.

Example:

Seth and Logan are registered domestic partners. Seth recently entered a nursing home and was approved for Long Term Care Medi-Cal with Spousal Impoverishment. Seth’s monthly income is $3,000. Logan’s monthly income is $1,435 which is below the MMMNA, allowing him to receive an allocation from Seth. 

Step 1: Find Maximum Allocation to Community Spouse

                        $3,854             MMMNA

                       -$1,435             Community Spouse Income

                        $2,419             Max. Allocation to Community Spouse

Seth can allocate to Logan up to $2,419 of his own income so that Logan can meet the MMMNA. 

Step 2: Calculate Monthly Resident Cost

            $3,000             Institutionalized Spouse Income

           -$2,419             Max. Allocation to Community Spouse

               $581             Remaining income after allocation

                -$35             Personal Needs Allowance

               $546             Institutionalized Spouse’s Monthly Resident Cost

Seth’s monthly resident cost to the facility is $546 after allocation to Logan.

The couple can also file for a fair hearing to increase the MMMNA to generate additional income; and/or obtain a court order to obtain additional income-generating resources.

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H. Family Allocation

Under Federal and state laws, Medi-Cal recipients can allocate additional income for the support of a dependent “family member” when there is a community spouse at home. Family members include only natural or adopted minors or dependent children, or dependent parents or siblings of the institutionalized or community spouse who are residing with the community spouse.  In order for the children to receive the maximum family member allocation, there must be a community spouse. Grandparents who have legal guardianship over grandchildren have been hit hard by this onerous rule, and foster children are not considered “children” or even “family members” for the purposes of long-term care Medi-Cal.

The family member base allocation amount, which is used to determine how much income the long-term care beneficiary may allocate to family members, is increased annually.  The current amount, $2,465 is effective July 1, 2023 through June 30, 2024. Of course, the allocation is only possible if the institutionalized spouse has sufficient income left over after the spousal allocation to the community spouse.

The family allocation is calculated separately for each family member.  Any income is deducted from the maximum allocation, and the remainder is divided by 3 to arrive at the total maximum allocation.  If the child or children receive no income, the maximum family allocation amount would be $821 for each child.

$2,465     (maximum family allocation)
-300(Social Security income received by child)
$2,165     divided by 3 =  $721 maximum family allocation for each child

(source: ACWDL 23-12; Form MC 176 W, section IX)

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I. Medi-Cal Recovery

Medi-Cal applicants, beneficiaries and their spouses should always be aware of the Medi-Cal Recovery rules and plan ahead if they want to avoid recovery on their home or other assets. For detailed information on the Medi-Cal Recovery program, see CANHR’s consumer booklet on Medi-Cal Recovery, https://canhr.org/wp-content/uploads/Medi-Cal_Recovery.pdf

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