When a parent is diagnosed with severe dementia, it can be an emotionally and financially challenging time for adult children. The costs of long-term care or memory care, particularly in places like Orange County, California, can be staggering. However, there are strategies to help your parent become eligible for Medicaid (known as Medi-Cal in California) to alleviate the financial burden. In this blog, we will explore what to do if your parent is diagnosed with severe dementia and how to navigate the Medicaid eligibility process.
Understanding the Financial Impact
First, it is crucial to recognize the monetary impact of severe dementia care in Orange County. The cost of long-term care, such as memory care facilities or in-home care, can vary significantly. In Orange County, these costs can easily exceed $5,000 to $15,000 per month or more, making it unsustainable for many families overall.
Strategies to Consider:
- Financial Planning: Start financial planning early. Consult with a certified financial planner who specializes in eldercare. They can help create a plan that preserves your parent's assets while ensuring they receive the necessary care.
- Medicaid Eligibility: Medicaid, or Medi-Cal in California, is a joint federal and state program designed to assist low-income individuals with healthcare costs. Eligibility for Medicaid is based on income and asset limits. To become eligible, you may need to spend down assets and reduce income. Consulting with an elder law attorney can help you navigate these complex rules.
- Medicaid Planning: Medicaid planning involves making strategic decisions to protect assets and income while becoming eligible for benefits. Techniques like setting up special trusts, transferring assets, and converting countable assets into exempt assets can be part of this planning process.
Medicaid in California is known as Medi-Cal. To become eligible for Medi-Cal, an individual must meet certain income and asset requirements. Here are some key points to consider:
Income Limits: Medi-Cal has both income and asset limits. In 2023, the income limit for a single individual is typically around $1,412 per month. If an applicant's income exceeds this limit, they may be required to use a Qualified Income Trust (QIT) or "Miller Trust" to establish eligibility.
Asset Limits: As of 2023, the asset limit for a single individual is generally $2,000. Certain assets, such as a primary residence (up to a certain equity limit), a vehicle, and personal belongings, are exempt from consideration. However, other assets, including savings and investments, are countable assets that must be spent down to meet the asset limit.
Look-Back Period: California, like all states, has a Medicaid look-back period. Any asset transfers made within the look-back period (currently 30 months for Medi-Cal) may result in a period of ineligibility for benefits. Carefully planning asset transfers to occur outside of this look-back period is a key aspect of Medicaid planning.
Medi-Cal Estate Recovery: Medi-Cal estate recovery is a process by which the state seeks to recoup the costs of long-term care services provided to Medi-Cal recipients after their death. Here are some important points to understand:
- Recoverable Assets: The state can seek recovery from the estate of the deceased Medi-Cal recipient, which may include assets like a home, investments, and other property.
2. Exemptions: Certain assets and properties are exempt from estate recovery, such as a surviving spouse's primary residence. Additionally, if a surviving child or other eligible relative has been living in the home for an extended period, it may be exempt from recovery.
3. Hardship Waiver: In some cases, a hardship waiver can be requested to prevent estate recovery. This may apply if recovery would cause an undue financial hardship for the deceased individual's heirs.
4. Living Trusts and Recovery: Living trusts can be a useful estate planning tool to avoid probate and streamline the transfer of assets to heirs. However, in California, a living trust may not necessarily prevent estate recovery for long-term care expenses. While assets held in a revocable living trust may pass directly to beneficiaries without going through probate, they are generally still considered part of the estate for Medi-Cal estate recovery purposes. When things go through Probate they are for sure going to be caught up in a recovery claim by the state.
5. Home and Community-Based Services (HCBS): In California, the Medi-Cal program offers various HCBS programs that provide in-home care and support for seniors. These programs can help your parent receive care in the comfort of their own home, potentially delaying or avoiding the need for nursing home care.
6. Medi-Cal Waiver Programs: Explore Medi-Cal waiver programs specifically designed for individuals with dementia. These programs provide additional services and support for those who would otherwise require nursing home care.
7. Seek Legal Advice: Consult with an elder law attorney who specializes in Medicaid/Medi-Cal planning. They can help you understand the intricacies of the program and ensure you are making the right financial decisions.
8. Long-Term Care Insurance: If your parent has long-term care insurance, review the policy to understand what it covers. This insurance can help offset the costs of memory care or nursing home care.This is a key to traversing the look back period in many cases.
9. Advance Healthcare Directives: Ensure your parent has advance healthcare directives and power of attorney documents in place to make medical and financial decisions on their behalf when they are no longer able to do so.
Caring for a parent with severe dementia is emotionally taxing, and the financial burden can add to the stress. However, with careful planning and knowledge of Medicaid/Medi-Cal eligibility rules, you can find ways to access the necessary care while protecting your parent's assets to some extent.
In Orange County, California, where the cost of long-term care is high, it is especially crucial to explore all available options. Do not hesitate to seek professional advice, including financial planners, elder law attorneys, and Medicaid/Medi-Cal specialists, to ensure you make informed decisions that benefit both your parent and your family.
Remember, the Medicaid/Medi-Cal application process can be complex and time-consuming, so it is best to start early and work with professionals who can guide you through the intricacies of the system. By doing so, you can provide the best possible care for your parent while safeguarding their financial future.