Medi-Cal is a needs-based program meant to help those without considerable resources access medical care and benefits. Since it is needs-based, there are significant asset and income limits attached to eligibility, which can easily lead to a disqualification from receiving benefits if the assets are not monitored closely. However, there are several ways to prevent a Medi-Cal eligibility disqualification through the use of trusts. For the purposes of this article, we’ll focus on how an irrevocable trust can help if a person expects to receive Medi-Cal benefits in the future and a First-Party Special Needs Trust if a person is ready to receive Medi-Cal benefits.
If it’s believed that Medi-Cal will be in a person’s future and that they may run into difficulties due to their amount of assets, an irrevocable trust designed specifically for Medi-Cal eligibility may be the answer. This type of trust must be established and funded at least 5 years before Medi-Cal is needed, which can be tricky since the future may be hard to predict. Once the assets are transferred to the irrevocable trust, they are not technically owned by the person and are not considered as countable assets for Medi-Cal, though soon under anticipated law changes in California, the person will be penalized if the transfer happened within those 5 years. While the person is alive, the trust funds can be used for their benefit as directed by the trustee, and once the person passes away, the funds may go to whomever is listed as a beneficiary of the trust.
First-Party Special Needs Trust
If a person is ready to receive Medi-Cal benefits but is over the asset limit, those assets can be placed in a First-Party Special Needs Trust. There are several guidelines established by the state of California to ensure that the trust is set up correctly and the funds are used only for the benefit of the person receiving Medi-Cal. The basics of trust are that only the Medi-Cal beneficiary’s money can be used, the beneficiary must be under the age of 65 and disabled, and that the state is named as the primary beneficiary of any trust assets left behind after the person passes away. Since there are so many guidelines for this trust, it’s important to speak with an experienced California elder and special needs lawyer attorney to find out if this type of trust will be the best fit for your situation.
If you would like to get more information about Medi-Cal eligibility through the use of trusts, or if you’re currently in the process of getting a loved one qualified for Medi-Cal and are running into issues, please set up an appointment at our San Fernando Valley elder law office by calling (818) 905-6088.