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No Resource Cap for Medi-Cal?

California legislatures recently passed AB 133, which is creating quite the stir in the elder law community. In particular, section 364 therein is especially surprising. It states, in its entirety:

“SEC. 364. Section 14005.62 is added to the Welfare and Institutions Code, to read:

14005.62. (a) (1) Notwithstanding any other law, for an applicant or beneficiary whose eligibility is not determined using the modified adjusted gross income (MAGI)-based financial methods, as specified in Section 1396a(e)(14) of Title 42 of the United States Code, the department shall seek federal approval to implement a disregard of one hundred thirty thousand dollars ($130,000) in nonexempt property for a case with one member and sixty five thousand dollars ($65,000) for each additional household member, up to a maximum of ten members.

(2) This subdivision shall be implemented only after the director determines that systems have been programmed for the disregards specified in paragraph (1) and they communicate that determination in writing to the Department of Finance, and no sooner than July 1, 2022.

(b) (1) Notwithstanding any other law, for an applicant or beneficiary described in subdivision (a), resources, including property or other assets, shall not be used to determine eligibility under the Medi-Cal program to the extent permitted by federal law. The department shall seek federal authority to disregard all resources as authorized by the flexibilities provided under Section 1396a(r)(2) of Title 42 of the United States Code or other available authorities.

(2) This subdivision shall be implemented only after the director determines that systems have been programmed for these disregards and they communicate that determination in writing to the Department of Finance, and no sooner than January 1, 2024.

(c) (1)   Notwithstanding Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code, the department may implement this section by means of county letters, provider bulletins or notices, policy letters, or other similar instructions, without taking regulatory action.

(2) Within two years of implementing the requirements set forth in subdivision (b), the department shall do both of the following:

(A) Adopt, amend, or repeal regulations in accordance with the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code and this section.

(B) Update its notices and forms to delete any reference to limitations on resources or assets.

(d) This section shall only be implemented to the extent consistent with federal law, upon the department obtaining any necessary federal approvals, and to the extent federal financial participation under the Medi-Cal program is available and not otherwise jeopardized.” (Emphasis added.)

This new bill is the first of its kind in the country; all states currently have an asset threshold for long-term care Medicaid eligibility. The bill purports to raise the resource cap substantially by mid-2022 and to eliminate the resource cap altogether by the beginning of 2024. Of course, as noted in the Bill, the implementation of this new law will depend on how the federal government reacts. Will the feds play ball? The Social Security Act states that 1115 waivers can be approved if the purpose thereof is to assist in promoting the overall objectives of the Medicaid program. Is the purpose of the Medicaid program to provide medical coverage to indigent individuals or individuals with means? As California’s new Bill doesn’t align with the current requirements of federal law, it will be interesting to see how this plays out in the coming months.

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