California shocked the elderly long-term care system recently by raising their Medicaid (Medi-Cal) asset limit 65-fold, from $2,000 for an individual to $130,000.
By Al Norman
California shocked the elderly long-term care system recently by raising their Medicaid (Medi-Cal) asset limit 65-fold, from $2,000 for an individual to $130,000. The limit for a couple will rise from $3,000 to $195,000. These changes will take place July 1, and the state will take off all asset restrictions by 2024.
The Medicaid asset limits in many states — like my home state of Massachusetts — have not changed since Medicaid was signed into law by President Lyndon Johnson 57 years ago. More than half of Medicaid funding comes from the federal government, but states have some flexibility as a funding partner to set their own eligibility rules.
The $2,000 asset test in most states has been ignored since 1965. Around nine states have raised their Medicaid asset levels — but nothing as dramatic as California.
In determining asset eligibility for Medicaid, most states do not count one vehicle, your primary home, household goods and personal belongings, a limited life insurance policy, and a pre-paid burial plan and burial plot.
But in addition to asset limits, Medicaid has income limits as well. In California, for example, a single individual 65 or older can’t have more than $1,583 per month in income, and $2,126 for a couple, to get Medi-Cal. The new asset limits will help consumers with a house and savings in the bank, but very little income.
There is no concern that “rich” people will get on Medi-Cal, because the income limits require applicants to use their income in excess of the limit to pay long-term care costs before Medi-Cal kicks in.
To accommodate the expected rise in Medi-Cal enrollment, the California legislature added $105.7 million to the General Fund annually beginning in 2022-23, to cover the new enrollees. The legislature said the Medi-Cal Asset Test removal will “remove the ‘senior savings’ penalty, to expand access to more income eligible seniors.”
There are roughly 13.7 million Californians — about a third of the state’s population — enrolled in Medi-Cal. A government study found that the net cost of eliminating the asset test completely would cost $200 million for roughly 18,000 new members.
Paying for long term care — whether in a nursing home or care at home — has been a major challenge for the elderly and disabled, because Medicare covers only a very short stay for nursing facilities, and custodial home care is very limited as well. What California has done is a work-around Congress — which has done nothing in decades to make it easier to families to deal with the enormous costs of long term care.
The private Long-term care insurance market has been marked by high-cost and complicated benefits, with policies that are unaffordable for the older Americans who need it the most.
Because states are a financial partner with the federal government in Medicaid, they can propose changes to income and asset limits — but the Feds still have to approve of every proposal. California, like most states, currently puts a lien on a person’s assets that is only collected once the elder and their spouse have both died. But if assets are no longer countable to qualify for care, estate recovery may mean going after income only.
Short of adding long term care to the Medicare program, and passing a Medicare for All bill, the California asset increase has shown other states one way to help the elderly and disabled population now. It’s a short cut to a better long-term care program.
California Assembly woman Wendy Carrillo, D-Los Angeles, who wrote the asset test bill as part of the state budget, explained: “We need to aggressively and proactively work on legislation that gives more people coverage. And until we have universal health care, these are the steps necessary to ensure that.”
Al Norman worked in the Massachusetts home care program for nearly 4 decades. He has been writing opinion columns for the 50+ Life for nearly that long.