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Mr. Miller has many years of experience in designing and implementing a comprehensive variety of Trusts, Wills, and other estate planning documents, as well as settling estates in the most expedient and appropriate method. Further, he counsels and assists clients on becoming eligible for VA benefits and Medi-Cal.

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What is the Look Back Period for Medi-Cal in California?


By merv,

  Filed under: Elder Law, Medi-Cal Benefits

Question
Medicaid and Medi-Cal
Deficit Reduction Act
Look Back Period
Status of California’s version of DRA
California’s Current Look Back Period
Conclusion

Question: What is the status of Medi-Cal and any drastic changes. I have heard that there is a 5 year look back period but then others tell me there is only a 36 month period. What is it really?

Medicaid and Medi-Cal: Medi-Cal is California’s version of Medicaid (which is what most other states call it). It is a joint federal/state program. That means that the Feds contribute a significant amount of money to the programs of each state, but only if the state meets certain Federally mandated requirements for the program. Because the Feds only have a limited number of requirements, each state’s program is different, sometimes radically so. That is why what is true in New York, for example, has little to no relationship to what might be true in California. And that is why a New York attorney typically will have little to no understanding of California’s program (and vice versa).

Deficit Reduction Act: In 2005 the Federal government passed the “Deficit Reduction Act” (DRA). One of the aspects of that bill is that the states had new requirements to meet in order to keep Federal funding of their respective Medicaid programs. That meant that the individual states had to change their Medicaid laws. One of those requirements was that there would be a 5 year look back period.

Look Back Period: This is the period of time from the date of the application backwards that the Medicaid authorities (County Department of Health Services or something similar) examine the applicant’s bank account records to uncover gifts that were made. Since there are net worth requirements to be eligible, the theory is that one should not be able to simply gift their assets to their children and thereby become eligible for Medicaid.

So if someone did make a gift during the look back period, a formula is used to determine the number of months that the applicant will be ineligible to receive Medicaid benefits. That is called the penalty period. For example, assume that Jane transfers a $100,000 bank account to her daughter two months prior to applying for Medicaid. Since that gift was within the look back period a penalty would be applied. Basically it is the value of the gift divided by a number which in California this year is $7092. So the penalty period in this example would be approximately 14 months ($100,000/7092=14.1). The look back period requirement under DRA is 5 years.

Status of California’s version of DRA: To my knowledge, every state except one now operates under the new requirements. What state is not yet there? That would be California. California passed its version of DRA several years ago. However, that law specifically says that it will not go into effect until the regulations required to implement it are published. There are currently “draft” regulations circulating. When will we get the final published regulations? That is anyone’s guess. I have heard that it will be next year, but then I have heard that for the last several years. So no one really knows.

California’s Current Look Back Period: What we do know is that right now California’s look back period is 30 months. That is despite the fact that the prior Federal requirement (I believe it was in 1993) required that the state’s increase their look back period from 30 to 36 months. California never did.

Conclusion: We also know that the California law indicates that when it does go into effect it will operate prospectively only. In other words, it is not supposed to govern what occurred prior to its going into effect. One can imagine that there will be various ways that can be interpreted when applied to actual fact situations, Nevertheless, the old law is far more lenient than the new law. We can do things under the old law to reduce penalty periods down to practically zero even with the look back and penalty periods. Many of those techniques will be unavailable to us under the new law. So anyone who is contemplating Medi-Cal should move forward now, not later.

12/10/2012

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About Living Trusts

About Living Trusts is hosted by the Law Offices of Merwyn J. Miller, as your online resource center to help you explore these key issues, and others, regarding your estate.

Merwyn J. Miller, J.D.

  • Board Certified Specialist in Estate Planning, Trust & Probate Law
  • Co-Author of legal text book and of “Don’t Go Broke in a Nursing Home
  • Teacher of law courses at public and private colleges
  • Continuing Education Instructor for attorneys
  • Columnist for largest regional newspaper in San Diego County and professional journals for 15 years, Contributing author to the book “In Your Service: The Veteran’s Friend”
  • Masters Degree in Financial Services - Estate Planning
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