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
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
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.
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
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.