Medi-Cal, which is California’s Medicaid program, has been in place for almost 60 years; during this time, it has gone through a number of changes. In 2024, some significant changes occurred that will make it easier for people with disabilities to obtain the medical coverage they need while still owning assets.
The History of Medi-Cal
In 1966, the Medi-Cal program was created with the federal legislation that created Medicaid. As the largest state Medicaid program in the country, it was also the first to pilot a managed care structure in the early 1970s; over the past several decades, it has been moving from a fee-for-service model to one that relies on risk-based managed care.
Over the past several decades, several changes have been made, many with the intention of expanding eligibility to more people. Of course, some have worked better than others, but overall, the program currently serves approximately 38 million people including seniors, children, and individuals with disabilities.
How Medi-Cal Serves Adults with Disabilities
In California, many adults dealing with disabilities rely on Medi-Cal for services that may include:
- Comprehensive health coverage. Depending on the individual’s needs, this coverage may include primary and specialty care, hospital services, mental health care, and prescription drug coverage.
- Long Term Services and Supports. These services may include things like in-home support (which allows people with disabilities to live as independently as possible in their own home), nursing home care, and adult day health care.
- Developmental Services. Medi-Cal works with the state’s Department of Developmental Services (DDS) to support people with developmental disabilities by providing early intervention services for small children, case management, and behavioral health services
- Home and Community Based Services (HCBS). Through HCBS waivers, Medi-Cal can provide services such as personal care services to assist with daily activities, home health services by licensed health care professionals, and respite care for primary caregivers.
- Financial Assistance. By providing no- or low-cost coverage – and in some cases special programs for elderly or disabled people who may not otherwise qualify under the Federal Income Limits – Medi-Cal can offer financial assistance for health services to individuals in need.
- Access to Assistive Technology. Medi-Cal can cover costs for resources such as wheelchairs, mobility devices, technology that assists with speech and communication, and necessary medical equipment like oxygen, diabetic supplies, and catheters.
- Coordination with Other Public Benefits. All of the different federal and state public benefits can seem impossible to navigate; Medi-Cal coordinates with programs such as Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) to provide holistic support and coverage.
- Advocacy and Support. Medi-Cal often supports advocacy efforts and provides resources to help individuals with disabilities access the benefits and programs they need.
Medi-Cal Managed Care Changes
In 2011 and 2014, several changes began to be made to transition seniors and people with disabilities into Medi-Cal managed care programs in counties throughout California. This was partly the result of changes brought on by the Affordable Care Act (ACA), and partly due to the evolution of the program.
During this time, almost 5 million Medi-Cal recipients were transitioned into some form of managed care. This was done with the intention of offering more comprehensive and holistic care for more people.
Recent Medi-Cal Changes
Asset Test
For many years, some of the most difficult Medi-Cal requirements to work with were the asset test and the income test. The income test is still in place, partly because it corresponds with federal requirements, but in 2022, some significant changes were made that are proving to be a benefit for many people.
Prior to 2022, the asset test only allowed a Medi-Cal recipient to own up to $2,000 in assets for an individual or $3,000 in assets for a couple. In many areas – and especially in California – that is an extremely difficult test to pass for most people.
Essentially, receiving Medi-Cal benefits required a person to own almost nothing past what was necessary. Assets that are countable for Medi-Cal include:
- Bank accounts
- Cash
- Second vehicle
- Second home
Assets that are not countable include:
- Retirement funds (if you are taking the minimum monthly distribution)
- Tools that are necessary for your work
- Primary vehicle
- Primary home
In 2022, a rule change was made that temporarily increased the asset test limit to $130,000 for individuals or $195,000 for couples. Note that what is considered countable and uncountable did not change, but the limits did. This was a significant improvement!
On January 1, 2024, the asset test was eliminated from Medi-Cal eligibility! This is great news for many people – it means that they will no longer be asked about what they own in the eligibility application.
Which Medi-Cal Requirements Are Still In Place?
Income Test
Although it is great news that the asset test was removed, Californians still need to be aware of the income test. Often, in order to qualify for Medi-Cal without having to contribute to Share of Cost, residents need to not make more than 138% of the Federal Poverty Level, or $14,580 per year.
In other words, for full Medi-Cal coverage, one would need to bring in no more than $1,670 per month. In California – and especially in larger cities – many people struggle to live on that amount.
People making more than this amount can still qualify for Medi-Cal, but they will often be subject to paying share of cost.
Medi-Cal Share of Cost
Because Medi-Cal is not private healthcare insurance, is does not have deductibles or co-pays; however, it does have share of cost. This is not subject to a capped limit like a deductible – rather, it is determined from your monthly income, both earned and unearned.
Earned income is payment you receive in exchange for your time, services, or products, like a paycheck or salary. Unearned income includes things like dividends, rental income, and similar passive sources.
Medi-Cal will automatically calculate your share of cost (SOC), but here is a basic overview of how it works.
If you make over $1,670 per month from any combined sources (earned or unearned income), you will be bumped into share of cost.
As an example, imagine you make $1,800 per month. Medi-Cal will subtract $600 for living expenses (rent, food, etc.) and then subtract your healthcare coverage costs. For this example, imagine you pay $200 per month in Medicare costs. Subtracting these amounts from your total income, you would owe $1,000 in share of cost – 55% of your monthly income.
$1,800
-600
-200
$1,000
There are ways to avoid share of cost and still earn money, though – we’ll get to those in a bit. But first, we’re going to cover how SSI and SSDI work with Medi-Cal in 2024.
SSI and Medi-Cal
Although Medi-Cal is not dependent upon Supplemental Security Income (SSI), the two programs are tightly linked in some ways.
Automatic Eligibility
In California, residents who qualify for SSI automatically qualify for Medi-Cal, meaning that no additional application process is required. For many seniors and adults with disabilities, this eligibility allows them to more easily get the medical care and assistance they may need, including in-home health care or assistive technology.
Comprehensive Healthcare Coverage
When a person qualifies for SSI in California, they automatically become eligible for full-scope Medi-Cal coverage. This can cover a number of things, depending on the needs of the individual.
Financial Protection
Since SSI recipients automatically qualify for Medi-Cal coverage, they are not subject to additional premiums or costs. Of course, they are still subject to the income test, which can affect their share of cost if other arrangements are not made through an estate plan.
In addition, thanks to the 2024 Medi-Cal changes, recipients of SSI are no longer limited as to the assets or savings they may hold while still receiving medical coverage through state benefits.
Access to In-Home Health Services and Long Term Care
Many people who receive SSI may, at some point in their lives, require in-home health services (IHSS) or long term care; these services can often be covered through Medi-Cal. Because of their automatic eligibility and the connections between SSI and Medi-Cal, these services can often be simpler to obtain.
Continuity of Care
Many seniors and individuals with disabilities have medical needs that require continuous access to healthcare providers and services. Through the integrated managed care of Medi-Cal, they can often receive the care they need without worrying about potential interruptions.
SSDI and Medi-Cal
Although SSI recipients are automatically eligible for Medi-Cal, the requirements are different for individuals of Social Security Disability Income (SSDI).
Individuals who are disabled are often eligible for SSI; individuals who become disabled later in life and find themselves unable to return to their previous work can become eligible for SSDI.
Because of the differences in the two programs, eligibility and benefits through Medicare and Medi-Cal differ in significant ways.
Health Coverage
After 24 months of SSDI, recipients typically become eligible for Medicare; at this time, they are often eligible for Medi-Cal as secondary coverage. What this means is that Medi-Cal can cover costs like deductibles and co-pays, costs that Medicare does not pick up.
Coverage During the Medicare Waiting Period
During the 24-month waiting period, many SSDI recipients may qualify for Medi-Cal; this means that they can receive coverage without gaps until they become eligible for Medicare. Those who are eligible can qualify for full-scope healthcare through Medi-Cal.
Financial Protection
If an SSDI recipient is eligible for Medi-Cal, they are not charged additional premiums; this means that they can keep more of their benefits to pay their other costs. They are, of course, still subject to the income test, though they are no longer held to the asset test as of January 1, 2024.
Income and Asset Considerations
While SSI is available to anyone over the age of 65 or anyone with a disability, SSDI eligibility is determined by a combination of your age and work history, the classification of your disability, and how long you have worked and paid social security taxes.
When it comes to Medi-Cal, both are still subject to the income test illustrated above.
Medi-Cal Working Disabled Program
Some SSDI recipients are still able to work, though not at the same level they were able to before they became medically disabled. They are still earning an income, but need medical assistance.
For those that are eligible, they may receive Medi-Cal for a small premium that is based on their income. This program allows them to still work and maintain their independence while receiving healthcare coverage and assistance at a low price.
Medi-Cal and Special Needs Trusts
While the asset test is no longer a requirement of eligibility for Medi-Cal, for many people, a special needs trust (SNT) is still beneficial for many people. It is not necessarily a requirement, but it will allow more flexibility and freedom.
A special needs trust can significantly benefit recipients of either SSI or SSDI when it comes to Medi-Cal coverage. Here are some examples:
Maintain Eligibility for Public Benefits
Although the asset test is no longer applicable for Medi-Cal, the income test is still a consideration for many people.
If you have any sort of income that is passive or comes as a gift from family members or other loved one, that income is considered countable income for Medi-Cal – which can easily bump you into share of cost.
Placing the source of the passive income or the money to be disbursed in a properly formatted special needs trust can allow you to still receive this income, but without it impacting your SSI or Medi-Cal eligibility – and without bumping you into share of cost.
Enhance Quality of Life
Although SSI and Medi-Cal can cover basic living and comprehensive healthcare costs, there are many other costs that need to be covered – and having the money for those costs can affect benefits.
Some of these costs can include:
- Educational expenses
- Travel and entertainment
- Rehabilitation or therapy costs that are not otherwise covered
- Home modifications for accessibility
Additionally, in many areas of California, SSI doesn’t begin to cover living costs like rent or mortgage payments, transportation and gas, food, and clothing. Through a well-structured special needs trust, these costs can be covered without affecting benefit eligibility.
What Can a Special Needs Trust Do for Medi-Cal Recipients?
Because a properly structured special needs trust is administered by a third party (someone other than the beneficiary), technically the assets in the trust are not in the name of the person receiving the payments. This separation is what allows beneficiaries to receive those payments without them affecting public benefits.
In addition, because of how we structure special needs trusts, they can offer a large amount of financial protection for the beneficiary. Rather than having to try to manage all of the assets in the trust themselves, a trustee (who can be a professional, a family member, or a nonprofit) can handle all of the management and distribution.
The trust is set up with specific instructions that provide legal safeguards to protect the assets in the trust from misuse and creditors. These instructions can also determine what happens to the assets in the trust when it is no longer needed.
Creating a Special Needs Trust
Our office often gets questions about special needs trusts, as we’re one of the few firms that deal with them often.
One of the common questions we receive is, “Do I have to go through an attorney to create a special needs trust?”
This is understandable. There are websites popping up all the time, offering wills and trusts for a fraction of the price of working directly with an attorney.
A special needs trust is different from a general trust, though – it’s complex. It is not a cookie-cutter form. Every family (and every beneficiary) has different needs and a different situation, and it is essential that your special needs trust is drafted in a way that specifically meets those needs.
Without an experienced attorney by your side, it is very easy to miss something important – something that can cost you or your loved one dearly. It is also one part of an overall plan to protect your family, your assets, and your legacy.
To get started on creating an estate plan that is tailored to your needs and goals, call our office at (650) 690-2571 or schedule your consult on our website.