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.

Medi-Cal classifies property as "exempt" and "non-exempt". Exempt property is not counted in determining eligibility; non-exempt property is counted. If the applicant has more than $2,000 in non-exempt property, he/she will not be eligible, unless the property is spent down for adequate consideration before the end of the application month.

The following property is generally exempt and, therefore, not counted in determining eligibility:

  • The Home: totally excluded, if it is the principal residence. Includes mobile home, houseboat, or an entire multi-unit dwelling as long as any portion serves as the principal residence of the applicant. The property remains exempt if a person in a nursing home or the person's representative expresses an intent to return home on the current Medi-Cal Application and Statement of Facts, or if an "exempt" individual resides in the home, such as a spouse, a minor, blind or disabled child (of any age) or a sibling or son or daughter who has lived in the home continuously for at least one year before the applicant entered a nursing home. Note that when the home is exempt, it can be transferred without penalty and without affecting the Medi-Cal eligibility.
  • Other Real Property: can be exempt if the net market value of the property (minus any encumbrances such as mortgages, loans, etc.) is $6,000 or less and the beneficiary is "utilizing" the property, i.e., receiving yearly income of at least 6% of the net market value. Property used as a business can also be exempt if it meets the standards under the program, i.e., it is actually used as a business, reported to the IRS as such, etc.
  • Household Goods and Personal Effects: totally exempt.
  • Jewelry: for a single person, wedding, engagement rings and heirlooms are totally exempt and other items of jewelry with a total net market value of $100 or less are exempt; for spouses, when one spouse is in a nursing home, there is no limit on exempt jewelry for determining institutionalized spouse's eligibility.
  • Cars/motor Vehicles: one car is generally exempt if used for the benefit of the applicant/beneficiary or if needed for medical reasons.
  • Whole Life Insurance: policies with a total face value of $1,500 or less. If the total face value of the policy or policies exceeds $1,500, then the cash surrender value of the policies is counted toward the $2,000 cash reserve. If the cash surrender value exceeds the $2,000 cash reserve, the applicant will not be eligible unless, he/she reduces the value of the policy.
  • Term Life Insurance: totally excluded.
  • Burial Plots: totally excluded.
  • Prepaid irrevocable burial plan of any amount and $1,500 in designated burial funds: There is no limit on the amount of the irrevocable burial fund, but the $1,500 in designated funds must be kept separate from all other accounts. Accumulated interest on burial funds is also exempt.
  • IRAs and work-related pensions:
  • In applicant's/beneficiary's name: The balance of the IRA or the pension is considered unavailable if applicant/beneficiary is receiving periodic payments of interest and principal.
  • In spouse's name: The balance of the IRA or Pension fund is totally exempt from consideration and is not included in the community spouse resource allowance (CSRA).
  • Non work-related annuities:
  • Annuities purchased prior to 8/11/93: Balance is considered unavailable if applicant/beneficiary is receiving periodic payments (of any amount) of interest and principal.
  • Annuities purchased between 8/11/93 and 3/1/96: Annuities purchased between 8/11/93 (the date the federal law changed) and 3/1/96 (the date California law changed) that cannot be restructured to meet the new requirements will continue to be treated under the old rules (see above). Written verification from the company or agent who issued or sold the annuity must be obtained stating that the annuity cannot be restructured.
  • Annuities purchased on or after 3/1/96 by the applicant or the applicant's spouse: the individual and/or spouse must take steps to receive periodic payments of interest and principal; payments must be scheduled to exhaust the balance of the annuity at or before the end of the annuitant's life expectancy. Annuities structured to exceed the life expectancy will result in denial or termination of benefits due to transfer of non-exempt assets.
  • Note: Annuities purchased by the applicant/beneficiary on or after 9/1/04 will be subject to Medi-Cal recovery when the beneficiary dies.
  • Cash reserve: Applicant/beneficiary may retain up to $2,000 in liquid assets, e.g., savings, checking, excess cash surrender value of life insurance.
  • Community Spouse Resource Allowance (CSRA): Community (at home) spouse may retain up to $109,560 (as of 1/1/2009) in liquid assets, not including the home and other exempt assets, such as IRAs and retirement funds.

Any assets above the property reserve limit of $2,000 or $109,560, in the case of a community spouse, or any asset that is not exempt will be counted by Medi-Cal in determining eligibility.

 

©2011 Phillip M Flanigan Attorney at Law