WHEN it comes to Medi-Cal , one of the concepts that our office gets the most questions about is something called Share of Cost. Share of Cost seems simple: it functions like an insurance deductible, the amount that a Medi-Cal beneficiary must pay to healthcare providers before receiving benefits from the state. Although it sounds straightforward, this deceptively simple payment can cause all sorts of trouble for a Medi-Cal beneficiary’s family if the proper Medi-Cal planning has not been executed, especially if the beneficiary is in long-term care.
How is Share of Cost calculated? It is based off the beneficiary’s total income, but it also depends on where the Medi-Cal beneficiary is living. If the person receiving Medi-Cal is residing in the “community” (not in a facility) then they have a “maintenance need” of $600. This means if the Medi-Cal recipient is at home, Medi-Cal will pay for medical services after the recipient has paid for medical costs equal to his or her income minus $600. If the person is living in a long-term care facility, the “maintenance need” is only $35, meaning that most of the institutionalized person’s income will end up going to the facility (they can keep a whopping $35). An easier way to think about the maintenance need is that it represents the amount of money that you get to keep from your income and the rest gets paid towards healthcare providers.
Many of our clients have an initial bout of panic when we explain Share of Cost during the initial consultation. “How am I going to survive on $600 a month?” they always ask us. Luckily, for community based Medi-Cal you only need to pay the Share of Cost if you actually use medical services in that month. Very often, our clients don’t need medical services for a month and get to keep all of their income. If you do need to use Medi-Cal benefits, there’s things you can do to maximize Medi-Cal’s utility: try and have all of your necessary medical needs met in the month you use the benefits to make sure your Share of Cost goes further (have multiple doctor visits, prescribe months of prescriptions, try to have all procedures done at the same time, etc.). Additionally, if after the maintenance need ($600) is subtracted from the income and the total income equals $1,220 for an individual or $1,645 for a couple, there will be no Share of Cost! This means if your income is low enough, you can effectively use Medi-Cal benefits for free.
If the Medi-Cal beneficiary is in a nursing home or facility, things can be tad more difficult. As the beneficiary only gets to keep $35, we often have kids or spouses asking us “How are we supposed to pay the mortgage? How are we supposed to pay taxes?” While it sounds pretty unforgiving, you must keep in mind that Medi-Cal is potentially helping pay for thousands of dollars of healthcare above the Share of Cost. If the beneficiary has private health insurance or outstanding medical bills we can reduce the Share of Cost one time for each expense, but this does not really solve the problem of meeting recurring bills. If the long-term care Medi-Cal recipient is married, we can use a set of rules called Spousal Impoverishment laws or a probate proceeding called a 3100 petition to allow the spouse to keep more income/lower the Share of cost, or to allow the spouse to keep more assets. Both options help the family pay expenses but can be quite complicated and may require the services of an attorney (a 3100 petition requires going in front of a probate court judge).
Although the above techniques can help ease the burden of paying the Share of Cost for Medi-Cal, they are no substitution for smart and properly executed long-term care estate planning. If done correctly, you and your spouse can protect thousands of dollars or more and still qualify for Medi-Cal benefits, meaning that you will have plenty of assets saved in the event that you or your spouse needs to pay the Share of Cost for healthcare services, especially if long-term care benefits are required. A qualified estate planning attorney can protect this money legally and within Medi-Cal regulations, leading to no Periods of Ineligibility. A little planning before a medical emergency can save you and your loved ones from experiencing financial hardship stemming from the problematic Medi-Cal Share of Cost.
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Elder Law Services of California is proud to announce that attorney Andrew Paranal has joined its trust department. Mr. Paranal began his career in estate planning in 2013 and has since expanded into asset protection and Medi-Cal planning. He became interested in Elder Law after helping care for a family member who experienced a debilitating event. Mr. Paranal is excited to join an established law firm and hopes to educate his Filipino community about the tremendous benefits of proper estate planning.
For more information, please visit elderlawcalifornia.com or call 1-800-411-0546 \