Many people underestimate how costly retirement can be. Even if people save aggressively throughout their working lives, invest successfully and control their costs, they may find that they don’t have enough resources to pay for all of their expenses.
Particularly if people have pre-existing medical conditions or if their health declines as they age, they may struggle to continue living independently. Some older adults can age in place if they have skilled in-home nursing support. Others need to move into a nursing home.
Unfortunately, Medicare does not cover either of those significant, recurring expenses. Older adults often need to qualify for Medi-Cal benefits. Medi-Cal is the California Medicaid program. Advanced planning long before applying is ideal. People who understand the three facts below may see the value in planning in advance to qualify for Medi-Cal coverage.
Qualifying isn’t easy
People applying for any Medicaid program have to meet very strict financial standards. There are limits on countable assets for Medi-Cal applicants. Most resources other than a primary residence can affect benefit eligibility. Income levels can also affect eligibility. While most people may fall under the threshold during their retirement years, others may not.
Benefits don’t always start immediately
The main reason that advance planning is so critical for older adults is that they may not be eligible when they need help the most. Last-minute gifts and transfers before applying for Medi-Cal coverage can result in a penalty. There is a five-year lookback period that applies. Any significant transfers during the five years leading up to an individual’s application, even if they occurred before their health declined, could result in a sizable penalty. The older adult may be responsible for their own costs for multiple months before medical coverage takes effect.
Estate recovery can consume a legacy
If people qualify for Medi-Cal and use benefits during their golden years, their estate may have to repay the benefits that they received. The estate recovery program seeks reimbursement for the full value of any benefits paid on behalf of a Medi-Cal recipient after their passing. While a primary residence doesn’t prevent an individual from qualifying, their equity could be at risk after they die. Without proper planning, people may not have anything left to pass on to their loved ones.
Planning to qualify for Medi-Cal can help people feel confident as they prepare for their golden years. Smart financial moves taken years in advance can allow people to qualify quickly, avoid penalties and preserve their legacies.