By Teddy Snyder
Wednesday, July 13, 2022
You might have read about a new law effective Jan. 1, 2022, amending California Welfare and Institutions Code §14005.62 to remove the asset limit to qualify for medical services under Medi-Cal, California’s version of Medicaid.
Previously, in addition to an income limit, beneficiaries were subject to a resource limit based on household size. The cash limit for a single individual was $2,000. Certain basic items such as one’s home and car were not counted within the limit.
When settling a serious injury case, parties will review and consider future medical treatment. Sometimes Medi-Cal is the only source for funding long-term expensive care. In order to stay within the asset limit and to protect continuing Medi-Cal access, the settlement often would include a structured settlement, a special needs trust or both.
The new Medi-Cal law changes the factors for parties to consider in fashioning a settlement to fund the injured person’s needs.
The new law removes the asset limit for traditional Medi-Cal but retains the income limit of 138% of the federal poverty level.
For a household size of one, the maximum income level per year (before taxes) is $18,075; for two, the max income level is $24,353; for three, it’s $30,630; and for four, it’s $36,908.
A severely disabled person who has been unable to work since the date of injury may be receiving Supplemental Security Income (SSI), which some people call “welfare.” SSI recipients automatically qualify for Medi-Cal. You can’t spend a medical benefit, so some people will want to keep their SSI.
What happens to expanded Medi-Cal?
California opted to accept expanded Medicaid under the Affordable Care Act. The ACA makes expanded Medi-Cal available to people aged 19-64, not on Medicare, not pregnant and with the same income limit shown above, and with a modified adjusted gross income less than 138% of the federal poverty level.
Like traditional Medi-Cal after passage of the new law, there was never an asset limit for expanded Medi-Cal. Expanded Medi-Cal provided “benchmark” coverage, less than full Medi-Cal coverage but considered comparable to private health insurance.
For some settlements, injured parties who refused a structured settlement or special needs trust could still qualify for expanded Medi-Cal. Now that there is no asset limit, there seems to be little point in choosing this option.
Reviewing the choices
If the injured person is currently receiving public benefits or may become eligible for public benefits, it may be wise to run a practice application at Covered California to determine what public health care benefits will be available post-settlement. Depending on how the settlement funds are handled, the available options might be narrowed to a subsidy to purchase private health insurance or no benefit at all.
Many injured people will still need a special trust to manage the settlement funds. Few of us are well able to manage money to fund a lifetime of expensive medical care. Medi-Cal and Medicare provide basic benefits, but extra funding can make a huge difference in fulfilling a severely injured person’s needs.
A special needs trust can help prevent loss of access to other benefits, such as Section 8 housing. To qualify, a family’s gross annual income must be less than 80% of the area median income.
Section 8 counts a portion of a family’s assets as income. If a family’s net assets are worth less than $5,000, all income derived from the assets is counted as annual income. If assets are greater than $5,000, included as income is the larger of all income derived from the asset or a percentage equal to what would be earned in a passbook savings account at the percentage rate determined annually by the U.S. Department of Housing & Urban Development.
If money is tight (not every settlement funds 100% of projected needs, and the future is always uncertain), this could reduce the amount that would otherwise be available for the injured person’s medical care.
Removing the asset limit will help some settling parties obtain or retain traditional Medi-Cal eligibility. But structured settlements and special needs trusts remain important tools to maximize the value of the available settlement dollars.
Attorney Teddy Snyder mediates workers’ compensation cases throughout California. She can be contacted through snydermediations.com.