Long-Term Care Insurance & Medi-Cal

By CalBroker Mag

As California’s population ages, the demand for assisted living and nursing homes has skyrocketed. Currently, over 400,000 Californians stay in licensed long-term care facilities, and this population is projected to grow rapidly in the next decade. Two out of three of these residents depend on Medi-Cal to cover the costs of their extended care.1

Medi-Cal offers many benefits for Californians who need longterm care. However, residents must meet strict eligibility criteria and contribute a portion of their income. By understanding the relationship between Medi-Cal and long-term care expenses, you can help your clients make strategic decisions about their financial and medical futures.

What Is Medi-Cal for Long-Term Care?

As the name suggests, Medi-Cal refers to California’s state-specific version of federal Medicaid. This program allows qualifying California residents to receive free or low-cost healthcare services.2

Unlike Medicaid, Medi-Cal offers coverage for long-term care expenses. Recipients can get financial support for these services, among others:2

» Assisted living

» Skilled nursing

» Home healthcare

For someone to receive coverage, a physician must deem long-term care services as medically necessary.2

The program also covers many expenses unrelated to long-term care, such as ambulance services, eyeglasses, and X-rays.2

Medi-Cal Eligibility

The requirements for qualifying for Medi-Cal have changed as of Jan. 1, 2024. Under the new guidelines, California residents may be eligible for Medi-Cal if they belong to one of the following groups:3

• Children, teenagers, and young adults under 21 years

• Seniors over 65 years

• Pregnant women

• Low-income people with dependent children

• Blind or disabled individuals

• Refugees

• People who have received breast or cervical cancer screenings

• People living in skilled nursing or intermediate care communities

• People who qualify for home- and community-based healthcare services

• Enrollees in CalFresh, Supplemental Security Income (SSI) CalWorks, and foster care

Californians may also be eligible for Medi-Cal if they earn 138% of the poverty level or below. For example, a single adult can qualify if they earn $20,783 annually or less. For a family of four, the income limit is $43,056.3

Historically, Medi-Cal considered assets, but the 2024 guidelines have eliminated this eligibility requirement. Qualifying long-term care residents can get coverage even if they own a home or have other property.3 This change simplifies the administrative process and enables recipients to keep getting support if they receive financial gifts or inheritances.

Share of Cost in Nursing Homes

Medi-Cal doesn’t offer complete coverage for long-term care. Instead, residents in skilled nursing communities must contribute a portion of their income to their monthly care costs. This contribution is known as the monthly resident cost or share of cost.2

Medi-Cal uses a simple formula to calculate the share of cost:2

• Share of cost = Gross monthly income - out-of-pocket medical premiums - $35 for the personal needs allowance

• The personal needs allowance increases to $50 for SSI recipients and $125 for VA Aid and Attendance recipients.2

Say, for instance, a nursing home resident has a gross monthly income of $2,000. They pay $50 monthly for dental coverage and have a $35 personal allowance for clothes and other expenses. Their share of cost would be $2,000 - $50 - $35 = $1,915.

Medi–Cal pays the nursing home for any expenses not covered by the resident’s share of cost. In this scenario, if the monthly expenses total $5,000, the resident would pay $1,915, and Medi-Cal would cover the remaining $3,085.

Medi-Cal may temporarily reduce a long-term care resident’s share of cost if they have old, unpaid medical bills. Residents may also deduct medically necessary equipment, prescriptions, services, and supplies not covered by Medicaid. For example, if a resident pays $80 monthly for a prescription, they may have a lower share of cost.

Comparing Medi-Cal With Other Options

While many California residents enjoy the benefits of Medi-Cal, it’s not the only way to receive financial support for extended care. Californians may also have coverage through Medicare or longterm care insurance. Here’s a quick comparison:

Medicare

Medicare is a federal program that provides health insurance for people 65 and older. People with disabilities, end-stage renal disease, or Lou Gehrig’s disease may also qualify for Medicare.4

Medicare and Medi-Cal have different eligibility requirements. Medicare doesn’t have income limits, so anyone over 65 years old or with a qualifying health condition is eligible for this insurance. By contrast, Medi-Cal is only open to people who meet specific income criteria or belong to a covered group.

Additionally, Medicare only covers up to 100 days of short-term nursing care. Members who exceed this cap must pay for extended care expenses with their personal savings or long-term care insurance.

Long-Term Care Insurance

Long-term care insurance bridges the gap between extended care and Medicaid or regular health insurance. These policies offer coverage for many services, such as:

» Assistance with daily living activities like bathing, getting dressed, and getting out of bed

» Adult daycare

» Home healthcare

» Hospice care

» Memory care for people with Alzheimer’s disease and dementia

» Occupational, physical, and rehabilitation therapies

Skilled nursing care

Typically, long-term care insurance companies reimburse members for medical expenses. Some policies have a daily or monthly cap, while others pay for a certain number of years of care.

In some cases, long-term care insurance offers more flexibility than Medi-Cal. Enrollees can receive care at their discretion instead of waiting on a doctor’s order, which Medi-Cal requires. Additionally, policyholders may pay less out-of-pocket than those who pay for Medi-Cal’s share of cost.

However, this insurance has a few limitations. Members must buy a policy before they need extended care and pay costly premiums. Additionally, people who exceed the coverage caps have to pay for additional expenses out of pocket, which can add up quickly.

Help California Clients Prepare for Long-Term Care

No one wants to think about getting older or developing a chronic illness. However, many people will eventually need long-term care to support healthy aging and maintain a high quality of life.

Empower your clients to make wise financial decisions by discussing options for long-term care. Some California residents can qualify for Medi-Cal if they meet income requirements and other criteria. Other options include Medicare and long-term care insurance.

As a trusted health insurance professional, you can help your clients understand how each program works. You can also collaborate with them to develop a comprehensive long-term care plan to meet their financial goals and needs.

Medicare does not provide long-term care coverage or custodial care unless medical care is needed. Learn more about what is covered under your plan.