Medi-Cal Planning Advisors – What You Need to Know!

WHAT IS MEDI-CAL PLANNING, AND WHY IS IT SO IMPORTANT THAT I HAVE COMPETENT ADVICE?
OVERVIEW:

The cost of providing nursing home care has increased dramatically in recent years. One method for satisfying the high cost of nursing home care is for the nursing home applicant to become eligible for Medi-Cal. Medi-Cal will pay for an indefinite period of custodial nursing home care in a Medi-Cal certified facility, as long as the applicant is financially eligible for Medi-Cal.

Medi-Cal is a combined federal and state program that pays for long term nursing home care. To qualify for Medi-Cal a single applicant may not have more than $2,000 of non-exempt or countable assets. However, Federal and state laws provide many planning options for both single and married individuals. These laws allow you to protect certain assets and still qualify for Medi-Cal benefits to pay your nursing home costs. In addition, regardless of what you may have heard, it is not necessary to begin planning for Medi-Cal three years before you need nursing home care. There are still plenty of things that you can do, including limited gifting, even if you are already in a nursing home.

COMPLEXITY OF PLANNING OPTIONS:
Medi-Cal and long-term care planning can provide great benefits for those fortunate enough to receive competent legal advice. Competent advice can sometimes mean the difference between retaining your assets, or needlessly spending them down to near poverty. However, Medi-Cal planning is a very complicated area of the law. For example, here is just a partial list of some of the various strategies available:

Medi-Cal asset protection strategies

  1. Purchase of exempt assets;
  2. Purchase of unavailable assets;
  3. Gifting and asset transfers;
  4. Annuity planning;
  5. Transfer of income;
  6. Income Allocation;
  7. Financial strategies for long-term care;
  8. Specially-drafted trusts with asset protection provisions;
  9. Specially-drafted powers of attorney;
  10. Irrevocable house trusts to protect the family residence;
  11. Revisions of beneficiary designations;
  12. Long-term care tax-planning;
  13. Long-term care insurance;
  14. Long-term care insurance alternatives;
  15. Fair hearings to increase asset limits;
  16. 3100 Petitions;
  17. Family law petitions to increase income;
  18. Assistance with the Medi-Cal application; and
  19. Substituted judgment petitions

As you can see, this important planning is not a do-it-yourself proposition. On the contrary, the more qualified and experienced the attorney, the better the results. Also, to properly implement these strategies requires an extensive understanding of numerous areas of the law. By law, only a licensed attorney can give you legal advice in these complicated areas, and only a licensed attorney may represent you in several of the beneficial options referenced above.

MEDI-CAL AND LONG-TERM CARE “ADVISORS”
Many so-called professionals give advice to consumers on Medi-Cal and long-term care planning issues. Here is a list of them, with a brief description:

* Insurance Agent: Unfortunately, many individuals who profess to be Medi-Cal experts are merely insurance salespersons. In order to sell annuities for Medi-Cal planning purposes, one must only possess an insurance license. In California, to obtain an insurance license requires only a 52-hour course of study, and the passing of a relatively easy examination. There are no further educational requirements. [As noted above, a Medi-Cal annuity is only one of many options utilized in Medi-Cal planning, and it is often not the best choice. However, it is one of the few options that insurance agents are licensed to provide. Commissions paid to insurance agents on the sale of these types of annuities can be up to 10% or more. (Example: An insurance agent convinces Mrs. Smith that the best option for her to qualify her husband for Medi-Cal is to place $250,000 in an annuity. If Mrs. Smith does so, the insurance agent will make upwards of $25,000 on the annuity sale!) Needless to say, this provides a huge financial incentive to recommend annuity products, whether or not they are suitable to your case.] And remember, the vast majority of insurance agents are not licensed attorneys, and therefore are prohibited by law from giving you legal advice.

* Securities Broker/Stockbroker: Those who sell securities (e.g. stocks, bonds, mutual funds or variable annuities), usually have either a Series 6 or Series 7 securities license. The course of study that most individuals pursue to take the examination for these licenses, which can take as little as several weeks, does not focus on Medi-Cal planning or long-term care planning. There are no further educational requirements. With regard to Medi-Cal planning, securities brokers are subject to the same conflicts of interest as described above pertaining to the insurance agent. And, unless the broker is also a licensed attorney, he or she is prohibited from giving legal advice.

* Financial Planner: In California, there is no regulation of the term “financial planner.” Therefore, anyone can hold himself out as a financial planner, and there are no minimum educational requirements. Even those with additional financial planning credentials (e.g. CFP, ChFC, CLU, RFC) do not necessarily have any advanced training in Medi-Cal or long-term care planning. As compared to the degree of expertise of an experienced elder law attorney, the course materials for these designations barely touch upon the legal aspects of Medi-Cal and public benefits planning. And again, unless the financial planner is also a licensed attorney, he or she may not render legal advice.

* Senior Advisor, Medi-Cal Consultant, Veterans Benefits Consultant, etc. Many who advise senior citizens on long-term care issues refer to themselves as senior advisors, Medi-Cal consultants, Medi-Cal specialists, Veterans Benefits Consultants, or some other variation thereof. In California, there is no regulation of these terms. Most individuals who use these designations are merely insurance agents, ex-Medi-Cal workers, or others who possess little or no legal training, and who have no additional qualifications or licenses, whatsoever. These individuals are not entitled under the law to give you legal advice, they are not entitled to draft legal documents, and they may not represent you before a court, if that becomes necessary.

* Paralegals: Paralegals are NOT attorneys! They are not trained in the law, and are not licensed to practice law. They are trained only to assist attorneys, very much like nurses assist doctors. Unfortunately, some paralegals violate the law and either offer legal services themselves, or allege that they have an attorney who reviews their work. It is illegal in California for a paralegal to practice law.

* General Practitioner Attorneys (or Attorneys who do not concentrate on Elder Law): Unlike all of those mentioned above, licensed attorneys are entitled under the law to render legal advice and draft legal documents. However, because of the complexity of issues relating to Medi-Cal planning, unless the attorney’s practice concentrates in the areas of Elder Law and Medi-Cal planning, he or she should not render advice in these areas. In fact, to do so, may constitute legal malpractice!

* Estate Planning Attorneys: Estate planning attorneys are generally knowledgeable in the areas of trusts, wills, taxation, and probate. However, unless the attorney is also an elder law attorney, he or she is not competent to give advice on Medi-Cal or long-term care planning strategies and techniques.

* Elder Law Attorney: In general, most elder law attorneys are knowledgeable in estate planning, Medi-Cal planning, and other long-term care planning techniques. To make a comparison, if you were ill and needed heart bypass surgery, you would go to a licensed physician, who specialized in these types of procedures. Regarding long-term care issues, if you need someone to help you and your family, you would consult with an Elder Law attorney. By far, the most difficult license to obtain, attorneys generally must have at least 5 years of higher education (including law school), and must pass a 3-day bar examination.

COULDN’T I SAVE MONEY BY HIRING SOMEONE LESS QUALIFIED?
I hope the answer to this question is obvious by now, but if not, please consider this. Choosing a less qualified advisor in this area of the law is the classic case of being penny-wise-pound-foolish.

Examples: Unfortunately, we see many cases where unqualified individuals and non-attorneys have assisted people with the Medi-Cal application and qualification process. In some of these cases, the client ended up saving a little money on the front end. However, much of the time, they ended up spending substantially more in the long run. For example, in some cases the clients ended up losing their principal residence unnecessarily to a Medi-Cal estate recovery claim! In other cases, they ended upon paying thousands of dollars in unnecessary taxes, because of poor planning. In still other cases, they ended up with most of their assets unnecessarily stuck for years in illiquid, poorly performing insurance products, recommended by the so-called Medi-Cal expert. Some of these people even became victims of financial abuse at the hands of these unlicensed so-called experts, as shown on a recent Special Assignment Consumer Alert, which aired February 19, 2004 on CBS News, Los Angeles.

One of the most important questions you need to ask yourself when you are confronted with these very important legal issues is: Do you want to be able to choose from all available legal options; or do you want your options to be limited by the lack of experience and qualifications of your advisor? If your advisor is only licensed and competent to provide you with one or two options (for example, an annuity), then it is highly unlikely that he or she will discuss with you other important, and maybe more beneficial options. There are two reasons for this: (1) Because of the his or her lack of experience and/or qualifications, he or she is not likely to even recognize many of the important planning options that are available; and (2) Even if the advisor knew other options existed, the advisor is not likely to recommend an option that he or she is not licensed to provide, because there would be no money in it. This is why it is absolutely essential that your advisor is licensed and competent to provide you with ALL OPTIONS available. Only then, will you have the best chance at developing the most efficient plan for you and your family.

One more thing. Although it is illegal for non-attorney insurance agents, senior advisors, ex-Medi-Cal workers, or other so-called Medi-Cal planners to give legal advice, it has been our experience that many of them do give such advice. Why? Because the issue of Medi-Cal planning involves a myriad of State and Federal laws and regulations, and you cannot engage in competent Medi-Cal planning without a good understanding of them. Now, what happens if your advisor is not a licensed attorney, and he or she gives you bad advice that substantially harms you or your family? What recourse will you have? Probably, none. If the advisor is not an attorney, he or she most likely cannot be held responsible for any legal advice given. (In fact, most of these phony advisors actually have the client sign a contract acknowledging that the advisor is not giving them legal advice, even though he actually is.) Moreover, because they are unlicensed, they do not have malpractice insurance that would cover any such bad advice. Therefore, the unfortunate consumer is simply out of luck!

With issues as serious as those that arise in the context of Medi-Cal and long-term care planning, the stakes are too high to entrust your fate to unqualified or inexperienced salespersons.

HOW DO I FIND AN ADVISOR WHO IS RIGHT FOR ME?
1. Is the advisor a licensed attorney? Long-term care planning and Medi-Cal planning are two of the most complex areas of the law. Whether you are looking for an advisor for yourself or your family, or you are referring an advisor to a friend, client or patient, choosing an incompetent, unqualified, or even dishonest advisor can have devastating effects. It is not possible to develop a comprehensive Medi-Cal or long-term care plan without addressing very complex legal issues. So, the first question you should ask yourself is whether or not the advisor is a legal expert, and is he or she licensed to practice law in the State of California? If the advisor is not licensed to practice law, then he or she is forbidden by law to give you legal advice. This means that whatever plan he or she does recommend, is likely to be missing some very serious elements. Remember, if an unlicensed individual gives you bad advice regarding these vital issues, and you are harmed by that advice, there is likely nothing you can do about it. You and your family are too important to entrust your fate to a so-called senior advisor or Medi-Cal consultant. Make sure your advisor is licensed to give you the very important legal advice you will require.

2. Does the attorney practice in the areas of estate planning AND elder law? Once you have answered the first question above, make sure that the attorney practices in the areas of both estate planning AND elder law, and make sure that the attorney has been practicing in these areas for at least ten years. As in any other area of the law, experience does count!

3. Is the attorney licensed and competent to provide you with ANY appropriate option? Why is this important to you? It is important because there are many different methods to provide long-term care protection–and each of these methods requires specific training and licensing. For example, if your advisor only has an insurance license, he is not likely to recommend a solution that doesn’t involve an insurance product. If the advisor has only a law license, she may lean towards recommending a solution involving legal services, or she may simply fail to recognize important options because she lacks training in other important areas. If, however, the advisor is licensed and competent to provide you with any appropriate option, he or she is less likely to make a self-serving recommendation, and more likely to recognize all possible planning options.

PLAN FOR YOUR FUTURE
Thomas L. McKenzie, Attorney at Law, is uniquely qualified to represent the very best interests of older people and their families. He is licensed and competent to provide all of the services listed above, and has had over ten years experience in all of the above disciplines. Our firm has successfully advised hundreds of clients in Southern California regarding preparation for, and/or obtaining Medi-Cal benefits for people in nursing homes. Our clients generally qualify for long-term care benefits, without depleting their estates. We work with each individual client to design and implement a comprehensive plan tailored to meet your specific needs. In addition, we seek to improve your standard of living. Our office will apply federal and state laws, which allow you to keep more monthly income, and retain more of your hard-earned assets.

Please be advised that the information on this site is not meant to be construed as legal advice. If you need legal advice, please contact our office at (562) 594-4200 for a FREE 30-minute consultation!