Dear Tim, If one of your parents needed nursing home care, Medi-Cal would pay for that care subject to a share of cost, if their non-exempt assets are worth less than the $109,560 Community Spouse Resource Allowance in effect for 2009. Your parents’ home is exempt, but the rental property is not. Since the rental property is certainly worth more than $109,560, then the ill spouse cannot get Medi-Cal. Right?

Wrong. Strangely enough, Medi-Cal eligibility workers do not care what your parents' rental property is really worth. To make it easy for them and to keep Medi-Cal applicants from having to pay for real estate appraisals, the gross value of non-exempt real property for purposes of Medi-Cal eligibility is the assessed value of the property shown on its property tax bill.

Even more strangely, under Medi-Cal rules, the net value of non-exempt real property is calculated by taking the property's assessed value and subtracting from it any loans against the property. Thus, it's possible to own rental property with a value of zero for purposes of Medi-Cal eligibility, if the loans against the property are greater than the property's assessed value.

I am sure that your grandmother purchased her home a very long time ago and enjoyed a low property tax assessment because of Proposition 13. When your grandmother died and your mother inherited the home, the property was not reassessed because of the parent-to-child property tax reassessment exclusion created by Proposition 58. This means that it's more than likely that the rental property's assessed value, and it’s value for Medi-Cal eligibility purposes, is low enough to fit inside of the CSRA.

Your parents should examine their property tax bill and other financial records to see if they will qualify for Medi-Cal if they ever need it. If one of your parents ever needs nursing home care, or suffers from an ailment that will likely result in a need for nursing home care in the future, they should consult with an elder law attorney. Attaining eligibility for Medi-Cal benefits is only the first step. Protecting their assets from Medi-Cal claims is the second. If either of your parents receive Medi-Cal benefits during their lifetime, then after they both pass away the California Department of Health Care Services will assert an estate recovery claim against their assets. For this reason, it's very important to act to shelter their assets if either of them ever need nursing home care, even if they already qualify for Medi-Cal.

Len & Rosie

Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at 996-4505, or www.lentillem.com.