Medicare is a federal insurance program paid out of Social Security deductions. All persons over 65 who have made Social Security contributions are entitled to the benefits, as well as disabled workers who have been eligible for Social Security disability benefits for at least two years.
Medicare has several parts including Hospital Insurance (Part A) and Medical Insurance (Part B). Those persons eligible for Social Security or Railroad Retirement benefits as workers, dependents or survivors, are eligible for Part A, Hospital Insurance, when they turn 65. If a person has not worked long enough to be covered for benefits, s/he may enroll in Part A and pay a monthly premium. If Medicare Hospital Insurance is purchased, that person must also enroll in Part B, Medical Insurance.
Participants in the Medicare program are liable for co-payments and deductibles as well as for monthly payments for Part B coverage. Medicare is not based on financial need. Anyone who meets the age, disability and/or coverage requirements is eligible.
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, and does not pay for custodial care, so the average stay under Medicare is usually less than 24 days. Thus, few can look to Medicare to pay for any substantial nursing home costs. On January 1, 2006, Medicare also began offering a new prescription drug program known as Medicare Part D.
Medi-Cal is a combined federal and California State program designed to help pay for medical care for public assistance recipients and other low-income persons. Although Medi-Cal recipients may receive Medicare, the Medi-Cal program is not related to the Medicare program. Medi-Cal is a need-based program and is funded jointly with state and federal Medicaid funds.
MEDI-CAL ELIGIBILITY SSI and other categorically-related recipients are automatically eligible. Others, whose income would make them ineligible for public benefits, may also qualify as “medically needy” if their income and resources are within the Medi-Cal limits, (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
medically indigent adults in skilled nursing or intermediate care or those who qualify for Medi-Cal funded home and community based option programs.
SHARE OF COST The State sets a maintenance need standard. Since January 1, 1990 the maintenance need standard for a single elderly/disabled person in the community has been $600 monthly; the Long Term Care maintenance need level (i.e., personal needs allowance when someone is in a nursing home) remains at $35 monthly for each person.
Individuals whose net monthly income is higher than the state payment rate may qualify for the program if they pay or agree to pay a portion of their income on monthly medical costs. This is called the share of cost. Individuals eligible with a share of cost must pay or take responsibility for a portion of their medical bills each month before they receive coverage. Medi-Cal then pays the remainder, provided the services are covered by the program. This works much like an insurance deductible. The amount of the share of cost is equal to the difference between the maintenance need standard and the individual’s net non-exempt monthly income.
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, some home health, X-ray and laboratory costs, orthopedic devices, eyeglasses, hearing aids, some medical equipment, etc.
Note: Since January 1, 2006, when the new Medicare prescription drug program went into effect, all dually eligible residents, i.e., Medi-Cal beneficiaries who also receive Medicare benefits, were affected. After January 1, Medicare, not Medi-Cal, started paying for most of the prescription drugs for these beneficiaries. Additional information about the Medicare Part D drug program can be found at the California Health Advocates web site: www.cahealthadvocates.org (Professionals) and www.calmedicare.org (Consumers).
All covered services, or the remaining costs over the share of cost of nursing home care, will be covered if the individual meets income/resource requirements. 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. Residents 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 $49 as a personal needs allowance. If the individual qualifies for Medi-Cal, s/he does 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 share of cost, and therefore costs the beneficiary nothing. If the HMO coverage includes drug benefits, maintaining the HMO coverage may become more important when the Medicare Part D drug program goes into effect, as the beneficiary will continue to receive drug benefits from the HMO, which may be more comprehensive than the Medicare coverage.
RESOURCE LIMITATIONS (Property/Assets) To qualify for Medi-Cal the recipient must demonstrate that s/he has limited resources available. Since January 1, 1989, the property limit for one person has been set at $2,000. There are many considerations when determining what assets count towards this $2,000 limit (business income excluded).
SPOUSAL IMPOVERISHMENT LAWS California law allows the community spouse to retain a certain amount of otherwise countable resources available to the couple at the time of application. This is called Community Spouse Resource Allowance (CSRA) and it increases every year according to the Consumer Price Index. 2017 CSRA is $120,900.
Separate property will be counted in the total resources and subjected to the $120,900 limit. However, only non-exempt resources are counted in the spouses’ combined, countable resources at the time of application for Medi-Cal. Thus, an IRA in the community spouse’s name, household goods, personal effects, a car, the house, jewelry, etc. are all totally excluded, regardless of value.
Resources acquired after the spouse is institutionalized and before he/she goes on Medi-Cal are not protected and will be counted at the time of application. However, once the spouse is eligible for Medi-Cal, any resources acquired after eligibility by the community spouse are protected and will not affect the institutionalized spouse’s eligibility. Resources held prior to the spouse’s institutionalization may be transferred under certain conditions.
Income: California law allows the community spouse to retain a minimum monthly maintenance needs allowance (MMMNA) of $3,023 (2017). This amount is adjusted annually by a cost of living increase. Under the name on the instrument rule, the community spouse may retain any income received in his/ her name alone. It is important to note that the $3,023 amount is a floor.
Thus, if the income of the community spouse is less than the MMMNA of $3,023, he/she may receive an allocation from the income of the institutionalized spouse. If income of the community spouse in his or her name alone exceeds the MMMNA, the community spouse may keep it all.
ETHICAL CONSIDERATIONS Property reduction requirements can usually be easily handled and documented, and it can be tempting for many attorneys to advise clients to reduce excess property on the purchase of exempt assets prior to a nursing home entry. It may be difficult however, to find a nursing home placement for a person who has spent all of his/her resources or who has few resources.
Although duration of stay requirements, i.e., requiring private pay for a set period of time, are illegal, nursing homes can and do review potential patient’s finances prior to admission. In most cases, they are unwilling to accept Medi-Cal eligible residents upon admission. The longer a person can pay privately, the more options there are available regarding nursing home placement.
In addition, a private pay patient may receive a higher level of service, e.g., a private room. These factors should be considered when advising clients how to reduce excess resources. Once a patient has been admitted to a Medi-Cal certified facility, s/he cannot be transferred or evicted simply because of a change from private pay to Medi-Cal payment status. Thus, unless a client can pay privately for an indefinite period of time, s/he should be advised to seek out a Medi-Cal certified nursing home.
Please be advised that the information on this site is not meant to be construed as legal advice. If you need legal advice, or for more information about Long-Term Care Planning, please contact our office at (562) 594-4200 for a FREE 30-minute consultation!