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Financial help for California Medicare enrollees

California has a 30-month lookback period to determine if asset transfers were used to reduce a person's assets (in the rest of the US, it's 60 months)

Josh Schultz // October 15, 2020

Reviewed by our health policy panel.

The state you live can have a significant impact on the care that you receive and how you pay for that care as a Medicare beneficiary.

This page explains how California’s regulations can help you pay for Medicare coverage as well as has how Medicaid may pay for long-term care, which is not generally covered by Medicare.

Does California help with my Medicare premiums?

Many Medicare beneficiaries who struggle to afford the cost of Medicare coverage are eligible for help through Medicare Savings Programs (MSPs). These programs will pay for Medicare Part B premiums and – in some cases – Part A premiums, as well as Medicare cost-sharing.

Beneficiaries who are eligible for MSPs in California fall into four categories:

MSP asset limits: The asset limit for QMB, SLMB and QI is $7,860 if single and $11,800 if married. QDWI’s asset limit is $4,000 for applicants living alone and $6,000 for applicants who live with one other person.

Who’s eligible for Medicaid for the aged, blind and disabled benefits in California?

Some low-income Medicare beneficiaries can receive coverage for cost sharing and services not covered by Original Medicare if they’re enrolled in Medicaid for the aged, blind and disabled (Medicaid ABD).

In California, Medicaid ABD covers up to $1,800 each year in dental exams, x-rays, cleanings, fillings, root canals and certain other services. If an enrollee receives prior-authorization, Medicaid will pay for dental care beyond this annual limit.

Medicaid ABD also covers routine eye exams and eyeglasses in California. This website has more information about vision coverage.

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Due to similar income and asset limits, many Medicaid ABD enrollees also receive an MSP.

The Medicaid program is called “Medi-Cal” in California.

Eligibility: The income limit is $1,467 a month if single and $1,982 a month if married.

Asset limits: The asset limit is $2,000 if single and $3,000 if married.

This website has more information about Medicaid ABD eligibility in California.

Medicaid ‘spend-down’ for regular Medicaid for the aged, blind and disabled benefits and HCBS

In California, individuals with incomes too high to qualify for Medicaid ABD or Home and Community Based Services (HCBS) benefits can enroll in the Medicaid spend-down, which allows medical expenses to be subtracted from income Medicaid counts toward its eligibility limit. California’s Medicaid spend-down is called the Share of Cost Program.

Enrollees activate their coverage by submitting medical bills equal to the amount their income exceeds the spend-down program’s income limit (known as their “excess income”).
California approves spend-down benefits in one-month increments – with additional coverage requiring new medical expenses to be submitted. Enrollees can also pay their excess income directly to Medicaid if they are unable to submit medical expenses.

Income eligibility: The income limit is  $1,294 a month if single and $1,747 a month if married.

Asset limit: The asset limit is $2,000 if single and $3,000 if married.

Federal assistance with prescription drug costs in California

Medicare beneficiaries who are enrolled in Medicaid, an MSP, or Supplemental Security Income (SSI) also receive Extra Help – a federal program that lowers prescription drug costs under Medicare Part D. Beneficiaries who don’t receive this program automatically can apply for it through the Social Security Administration (SSA). The income limit is $1,615 a month for singles and $2,175 a month for couples, and the asset limit is $14,610 for individuals and $29,160 for spouses.

Prescription drug discount program for Medicare beneficiaries

The Prescription Drug Discount Program for Medicare Recipients allows Medicare beneficiaries to pay the Medicaid rate for prescription drugs, plus a $0.15 processing fee. Medicaid usually pays far less for prescription drugs than the pharmacy’s cash price. This could help beneficiaries requiring medications that aren’t covered by Part D.

How does California regulate long-term services and supports (LTSS)?

Medicare beneficiaries increasingly need long-term care, which is not covered by Medicare for the most part. Twenty percent of Medicare beneficiaries who were living at home received some assistance with long-term care in 2015, and that percentage is likely to continue growing as the U.S. population ages. Medicaid fills this gap in Medicare coverage for long-term care, but its complex eligibility rules, which vary from state to state, can make qualifying for benefits difficult.

Applicants seeking Medicaid long-term care benefits will be given a level of care assessment to determine the benefits Medicaid will cover for them.

Medicaid nursing home coverage

Most long-term care used to be provided in nursing homes. Today, more Americans receive these services in their homes. But some individuals have living or medical circumstances that make nursing home care a better choice.

Income limits: There is no income limit for nursing home benefits. However, enrollees are not allowed to keep all of their income. Instead, they have to pay nearly all of it toward their care: They are allowed to keep only a $35 personal needs allowance and money to pay for health insurance premiums (such as Medicare Part B and Medigap).

Assets limits:  The asset limit is $2,000 if single and $3,000 if married and both spouses are applying. If only one spouse has Medicaid, the other spouse can keep up to $128,640. This asset limit excludes the value of many household effects, family heirlooms, certain prepaid burial arrangements, and one car.

Home and Community Based Services (HCBS) waivers

Medicaid also covers community-based long-term care, which is provided in an enrollee’s home, adult day care center, or assisted living facility. Programs that cover these services are known as Home and Community Based Services (HCBS) waivers because recipients don’t have to enter a nursing home. In California, HCBS recipients must need help with at least two activities of daily living (ADLs).

Income eligibility: The income limit is $1,470 a month if single and $1,938 a month if married.

Despite this income limit, HCBS recipients usually pay a portion of their income toward their care. If that amount is too high, it leaves enrollees without enough money to pay for health and living expenses. In California, enrollees can keep a personal needs allowance of $600 (as of 2018), but remaining income must be paid toward their care.

Asset limit: The asset limit for HCBS is $2,000 if single and $3,000 if married (and both spouses need care). If only one spouse has Medicaid, the other spouse can keep up to $128,640.

Spousal impoverishment rules for Medicaid nursing home and HCBS benefits in California 

Eligibility rules for Medicaid LTSS programs differ from other Medicaid benefits. Normally with Medicaid benefits, the income of both spouses is counted – regardless of who is applying. For LTSS benefits, usually only the applying spouse’s income is counted.

Spousal impoverishment rules allow the spouses of Medicaid LTSS recipients to receive a Minimum Monthly Maintenance Needs Allowance (MMMNA) from their Medicaid spouse’s income, along with resource and housing allowances. These rules apply when one spouse needs Medicaid coverage for LTSS, and the other spouse doesn’t have Medicaid.

In California in 2020, the community spouse can keep:

  • An MMMNA that is $3,216 per month.
  • A Community Spouse Resource Allowance (CSRA) of up to $128,640.
  • A monthly housing allowance of up to $646.50.

Permitted home equity in California

In most states, owning a home disqualifies enrollees from receiving Medicaid LTSS coverage if they have significant home equity (more than $595,000 in many states).

In California, however, there is no limit on home equity for an applicant’s principal residence. (California law actually does limit an applicant’s home equity to $840,000, but the state has not issued regulations to implement this limit.)

Penalties for transferring assets in California

Because long-term care is expensive, individuals may try to qualify for Medicaid LTSS by giving away or transferring their assets. To curb these asset transfers, federal law requires states to institute a penalty period for Medicaid nursing home applicants who give away or transfer assets for less than their value. States can choose to also have a penalty period for HCBS, and most have done this.

California has an asset transfer penalty for nursing home care, but not for HCBS. This means transferring assets will not disqualify applicants from receiving HCBS in California. (New York had been the only other state not to have an asset transfer penalty for HCBS, but it decided to implement a penalty period for those services starting in 2021.)

In California, this asset transfer penalty is based on a 30-month lookback period, during which time asset transfers and gifts are prohibited. In every other state, the look-back period is 60 months for nursing home care and typically the same period is used for HCBS, too.

The penalty’s length is calculated by dividing the value of all gifts and asset transfers occurring during the look-back period by the private cost for nursing home care (which is $10,298 a month in California in 2020).

Estate recovery in California

Each state Medicaid agency is required to recover what it paid long-term care related costs beginning at the age of 55. States can choose to also pursue estate recovery from enrollees in this age range for services that are not long-term care related. This process is called estate recovery.

Estate recovery also applies to certain enrollees under 55 who received long-term institutional care.

California previously attempted to recover its payments for all Medicaid benefits, but the state’s estate recovery rules were revised under recent changes to the law. For enrollees who pass away after December 31, 2016, the state will only attempt to recover the cost of nursing home benefits, HCBS, and related medical and prescription drug costs (that were received while 55 or older).

Due to these changes, California will never pursue estate recovery for enrollees who are survived by a spouse or registered domestic partner.

The state will only pursue estate recovery for assets that are subject to probate – meaning things like living trusts, life estates, and retirement accounts with “transfer-on-death provisions” are not recovered.

Where can beneficiaries get help in California?

Health Insurance Counseling and Advocacy Program (HICAP)

Free volunteer Medicare counseling is available through California’s Health Insurance Counseling and Advocacy Program (HICAP) by calling 1-800-434-0222. This is a State Health Insurance Assistance Program (SHIP) offered through the California Department on Aging.

HICAP can help beneficiaries enroll in Medicare, compare and change Medicare Advantage and Part D plans, and answer questions about state Medigap protections. They may also be able to offer referrals to local agencies for services like home care and long-term care. This website has a list of local HICAP offices in California.

Elder Law Attorneys

Elder law attorneys help individuals plan for Medicaid long-term care needs. Visit the National Academy of Elder Law Attorneys (NAELA) search feature to find an elder attorney locally.

California Health Advocates

California Health Advocates is a Medicare advocacy non-profit that supports legislation and policies that improve the lives of Medicare beneficiaries and their families. The organization also helps administer the California SHIP.

How do I apply for Medicaid in California?

The Department of Health Care Services (DHCS) administers the Medicaid program in California. You can apply for Medicaid or an MSP using this printable application, which you can mail or submitted at a local social services office.

Josh Schultz has a strong background in Medicare and the Affordable Care Act. He coordinated a Medicare technical assistance contract at the Medicare Rights Center in New York City, and represented clients in extensive Medicare claims and appeals. In addition to advocacy work, Josh helped implement state health insurance exchanges at the technology firm hCentive. He has also held consulting rules, including at Sachs Policy Group, where he worked with hospital, insurer and technology clients.

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