This past weekend I attended a very informative legal education seminar in Sacramento regarding Medi-Cal.

It focused on the proposed (draft) Medi-Cal regulations that will eventually implement the dreaded 2005 federal Deficit Reduction Act (DRA) legislation, which will greatly constrict Medicaid eligibility nationwide.

There also was a one-hour question and answer session in which state personnel discussed various Medi-Cal topics under existing law.

Now, let’s examine some of the important highlights – but remember, this article is not a substitute to obtaining legal advice from a qualified attorney.

DRA greatly constricts Medicaid eligibility in the following ways.

First, it lengthens the look back period to 60 months (from 30 months).

Second, it commences the penalty period at the time when a Medi-Cal applicant would otherwise become eligible to receive Medi-Cal, but for the disqualifying penalty creating transfers.

Third, requires that the value of all such transfers of countable assets (made within the five year look back period) be added together to compute a single penalty period.

DRA is, therefore, drastically different from the present law where each transfer of a countable nonexempt asset during the relevant look-back period at the time of application has its own separate penalty period. That period begins when the transfer was made and runs concurrently with any other ineligibility periods created by other transfers.

Thus, currently Medi-Cal allows penalty periods for transfers to expire or be greatly reduced at time of Medi-Cal application. This is because separate penalty periods run from when each transfer was made, and not consecutively as will be required under DRA, i.e., one after the other, so that each penalty is added on to the others.

Commentators said the following regarding DRA.

It continues to be delayed till at least next year, 2012, if not the following, 2013, when final DRA regulations might then have been approved.

In addition, anyone presently receiving Medi-Cal (and others who will become eligible before DRA is implemented) will continue to receive Medi-Cal under DRA (even if that they would otherwise be ineligible based on DRA’s rules) as DRA will not be retroactively applied; and, third, the draft DRA regulations contain important safeguards that protect otherwise ineligible persons where disqualification would seriously jeopardize personal well-being.

In addition, state employees answered certain other recurring questions under existing Medi-Cal law.

If the surviving spouse of a deceased Medi-Cal recipient gifts assets that were received wholly or partially from the deceased spouse, prior to the surviving spouse’s own death, then such gifted assets will not later become subject to estate recovery when the surviving spouse in turn dies.

Generally speaking, Medi-Cal Estate Recovery does not pursue those assets of a deceased Medi-Cal recipient which are worth less than $5,000 (such as ordinary items of personal property).

When examining a bank account to see whether the $2,000 Medi-Cal resource limitation on countable assets has been exceeded, the state computes the monthly value of a checking account by using the lowest account balance on any given day in the month in question and by subtracting all income deposits made during that same month and any checks still outstanding on that day.

In sum, the good news for now is that DRA continues to be further delayed and when it does eventually come into effect anyone already receiving on Medi-Cal will not be required to re-qualify under DRA Medi-Cal eligibility standards.

Lastly, fortunately, there will be important hardship exceptions to protect otherwise ineligible persons.

Dennis A. Fordham, attorney (LL.M. tax studies), is a State Bar Certified Specialist in Estate Planning, Probate and Trust Law. His office is at 55 First St., Lakeport, California. Dennis can be reached by e-mail at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at 707-263-3235.

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