MediCal

Reasons For and Against Using Medi-Cal
to Pay Nursing Home Care Costs

Paying for Nursing Home Care Costs

The cost of nursing home care in California continues to rise. By far the two most important sources for paying nursing home care costs are personal resources and Medi-Cal (California's Medicaid program). In this article, we refer to a patient using personal resources to pay for nursing home care as a "private pay patient." We refer to a patient using Medi-Cal as a "Medi-Cal patient."

Use of Personal Resources

A patient with sufficient resources could cover the cost of nursing home care from his or her available funds. According to AARP, consumers age 65 and older pay over 20% of nursing home care costs themselves.

Use of Medi-Cal

Medi-Cal is California's version of the Federal Medicaid program. Medi-Cal is designed to pay a significant portion of the cost of nursing home care for an eligible person. To be eligible, a person needing nursing home care must also have limited available resources. Although it may be obvious, note that Medi-Cal will not pay for nursing home care for a person whose condition does not require that level of care.

Some Reasons for Seeking Medi-Cal

Among the reasons given for seeking Medi-Cal are:

• Only Choice Available. Many people have no other source of funds to pay for nursing home care. Medi-Cal is their only choice.
• Helping the Healthy Spouse. For a married couple, Medi-Cal can provide needed care for an ill spouse. The healthy spouse need not become impoverished for the ill spouse to be eligible.
• Entitlement. Some people feel that they and their families have paid substantial taxes over the years, and that they are entitled to Medi-Cal coverage in recognition of their tax payments.
• Preserving Assets. With careful planning, a person can preserve assets for family, friends or charity while also becoming eligible for Medi-Cal. In this way, Medi-Cal (rather than personal assets) will pay for nursing home care.

Some Reasons for Not Seeking Medi-Cal

Not everyone who could be eligible for Medi-Cal chooses to seek it. Among the reasons given for not seeking Medi-Cal are:

• Needs-Based Program. Medi-Cal eligibility is based on need. As such, some people label it a "welfare" program.
• Application Process. The Medi-Cal application process can be time-consuming, difficult and intrusive. It can involve a loss of privacy, and be frustrating. At times, applications are denied. Denials can often be overturned on appeal, but the appeal process heightens the level of difficulty. Even after a successful application, further application-type work is required when eligibility is redetermined (at least every twelve months).
• Concern About Discrimination. It is illegal for a nursing home to discriminate against a patient based on status as a Medi-Cal patient. Nursing homes face financial pressures, however, in providing their services. Nursing homes are businesses, and seek to maximize their revenues and minimize their expenses. A nursing home is not limited in the amount it can charge a private pay patient, and the statewide average private pay patient rate substantially exceeds the amount Medi-Cal pays for a nursing home patient in Southern California.
• Fewer Nursing Home Choices. A private pay patient has a wider range of nursing home choices. Not all nursing homes accept Medi-Cal patients. Nursing homes that accept Medi-Cal patients have a financial incentive to choose a private pay patient over a Medi-Cal patient, when both apply for the same available bed space.
• Level of Care. Nursing homes only need to provide services for which they will be paid. Medi-Cal does not pay for all possible nursing home services. Medi-Cal pays for a double room, but not a private room. (A relative of a nursing home patient, however, may pay an additional amount to the nursing home to allow the Medi-Cal patient to obtain certain services not covered by Medi-Cal, including a private room.) A Medi-Cal patient may lose his or her private physician, because the physician does not accept Medi-Cal's level of payment for services.
• Loss of Control Over Assets and Income. At times, Medi-Cal eligibility is achieved through asset preservation planning. Many asset preservation planning approaches require the Medi-Cal patient to give up control over assets and income.

July 2006