Medi-Cal planning is the work of arranging your income, savings, and property so you can qualify for California’s Medicaid program (particularly its coverage of nursing home care that runs well over $10,000 a month) without being wiped out financially or losing the family home to state recovery after death. The job got harder on January 1, 2026, when California reinstated asset limits for non-MAGI Medi-Cal programs after a two-year window with no asset test. If you qualified between 2024 and 2025 without worrying about savings, your plan needs a second look now, not when a renewal notice arrives.
What Changed on January 1, 2026
From January 2024 through December 2025, California imposed no asset limit on non-MAGI Medi-Cal programs under Assembly Bill 133.1Department of Health Care Services. Asset Limit Changes for Non-MAGI Medi-Cal Eligibility and Enrollment Plan AB 116, part of the Budget Act of 2025, brought the test back effective January 1, 2026.2Department of Health Care Services. Reinstate Medi-Cal Asset Limit Fact Sheet The reinstated limits match the 2022 figures: $130,000 for an individual, $195,000 for a couple, and an additional $65,000 for each additional household member.
Anyone who enrolled during the no-asset-test period and now holds countable resources above these limits risks losing coverage at the next eligibility review.
Which Assets Count and Which Don’t
Countable resources include bank accounts, stocks, bonds, and non-exempt real property. Two of the biggest items most families own stay off the ledger: your primary home is exempt, and so is one vehicle.
Income limits are a separate test, and they never went away. The Aged, Blind, and Disabled Federal Poverty Level program ties eligibility to 138 percent of the Federal Poverty Level, which works out to roughly $1,836 per month for a single individual and adjusts as federal poverty guidelines update.3Los Angeles County Department of Public Social Services. Aged, Blind and Disabled Federal Poverty Level Program Social Security, pensions, and investment earnings all count.
Being over the income limit does not automatically disqualify you. Instead, the state assigns a monthly share of cost that functions like a deductible: you pay it toward your care each month before Medi-Cal picks up the rest. For nursing home residents, that share is steep. The state takes nearly all of your income, leaving a personal needs allowance of just $35 per month ($62 if you receive SSI). Allowable deductions like out-of-pocket health insurance premiums reduce countable income, and missing a deduction inflates your share of cost every month you’re on the program.
If You Are Married
When one spouse enters a nursing home and the other stays at home, federal law stops the state from stripping the community spouse. Two numbers matter.
The Community Spouse Resource Allowance lets the at-home spouse keep up to $162,660 in countable assets as of 2026, outside the institutionalized spouse’s $130,000 limit. The Minimum Monthly Maintenance Needs Allowance guarantees the community spouse at least $4,067 per month in income for 2026.4Department of Health Care Services. ACWDL 26-02 – 2026 Spousal Impoverishment Standards If the community spouse’s own income is below that floor, part of the institutionalized spouse’s income can be redirected to make up the gap before share of cost is calculated.
None of this happens automatically. Couples have to document how assets and income are split and claim the allowances during the application. Failing to assert them is a common mistake that leaves all marital assets counted against the nursing home spouse, and it is expensive to unwind later.
The 30-Month Look-Back
California reviews whether you gave away money or property for less than fair market value in the 30 months before applying for long-term care Medi-Cal.5California Department of Health Care Services. ACWDL 23-28 – Transfers of Assets Beginning January 1, 2024 That is shorter than the federal 60-month standard, but it still reaches into most people’s recent gift history.
If the county finds a disqualifying transfer, it divides the total value of the gift by the Average Private Pay Rate to produce a penalty period during which Medi-Cal will not pay for nursing home care. For 2026, the APPR runs around $14,440 per month. A $144,400 gift creates roughly a ten-month penalty, and your family covers the private-pay rate during that gap.
Two carve-outs matter for anyone applying in 2026 or soon after. Transfers made during 2024 and 2025 are excluded from the look-back entirely, because the asset test wasn’t in effect then. And transfers smaller than one month’s APPR are not penalized. Transfers made on or after January 1, 2026 are fully subject to penalty calculations.
Legal Tools for Repositioning Assets
With the asset test live again, the tools below each have a specific job. Getting the details wrong usually produces a worse outcome than doing nothing.
Irrevocable Trusts
Transferring assets into an irrevocable trust removes them from your direct ownership and can put them outside the state’s asset count. The trade-off is permanent: once funded, you cannot pull the assets back or rewrite the terms. The trust has to comply with California rules on third-party management and distribution, and the assets must have been in it long enough to sit outside the 30-month look-back before you apply. A trust funded within the look-back window is treated as a transfer for less than fair market value and triggers a penalty period.
Medi-Cal Compliant Annuities
A compliant annuity converts a lump sum into a stream of monthly income payments. To avoid being treated as a penalized transfer, the annuity must be irrevocable, non-assignable, and structured to pay out the full principal within your actuarial life expectancy. California must be named as primary remainder beneficiary up to the total amount of Medi-Cal benefits paid on your behalf. Annuities that miss federal requirements are treated as transferred assets under California law.6California Legislative Information. California Welfare and Institutions Code 14015
Personal Care Agreements
A personal care agreement is a written contract paying a family caregiver a fair rate for specific services such as meal preparation, transportation, and personal hygiene assistance. When properly structured, the payments are transfers for fair market value rather than gifts, so they don’t trigger look-back penalties. The agreement has to be in writing, cover future care only, and set pay at rates a professional caregiver in your area would charge. A detailed daily log of services is the single best defense if the state questions the arrangement.
Timing Gifts Outside the Window
The cleanest approach is giving away property or cash more than 30 months before you expect to apply. That takes early planning, which is exactly what most families don’t do, because Medi-Cal doesn’t come up until a health crisis forces it. Any gift inside the window and above one month’s APPR will delay eligibility. Document every large transfer so you can show it was made at arm’s length.
Protecting the Home From Estate Recovery
After a Medi-Cal beneficiary dies, the Department of Health Care Services is required to seek reimbursement for benefits paid. Recovery applies to nursing facility costs and related expenses for beneficiaries who were 55 or older when services were provided, or who were nursing home residents of any age.7California Legislative Information. California Welfare and Institutions Code 14009.5
The detail that drives most Medi-Cal planning: “estate” for recovery purposes means only the probate estate. Property that passes outside probate is beyond the state’s reach. A home held in a living trust, in joint tenancy, or passed through a revocable transfer-on-death deed skips probate, which means no state claim against it. This is why planning attorneys so often move the family home into a living trust well before care is needed. The transfer-on-death deed accomplishes the same probate-avoidance goal with less paperwork.
Recovery also cannot proceed when certain family members survive the beneficiary: a surviving spouse, a registered domestic partner, a child under 21, or a child who is blind or disabled.7California Legislative Information. California Welfare and Institutions Code 14009.5 These are shields during that person’s lifetime, not permanent erasures. Once a surviving spouse dies and no other protected family members remain, the claim can resurface against that spouse’s estate.
Tax Consequences People Overlook
Moving assets out of your name has federal tax effects that regularly get missed. The 2026 federal gift tax annual exclusion is $19,000 per recipient, meaning you can give up to that amount to any number of individuals without filing a gift tax return or touching your lifetime exemption. Married couples can combine to give $38,000 per recipient. Payments made directly to a medical provider or school on someone’s behalf don’t count toward the limit at all.
The more technical trap sits inside irrevocable trusts. Suppose you move a home worth $800,000 with a $200,000 original cost basis into an irrevocable trust. If the trust is drafted so the asset is excluded from your taxable estate, your heirs inherit your $200,000 basis and face capital gains tax on $600,000 of appreciation when they sell. An irrevocable trust can preserve the step-up in basis under Section 1014 of the Internal Revenue Code if it is drafted to include the assets in your taxable estate (for example, through a limited testamentary power of appointment or a retained right to trust income). The same trust can keep assets out of your countable resources for Medi-Cal and in your taxable estate for capital gains purposes, but only if drafted precisely. Not every trust template does both jobs.
Applying, and What Happens If You’re Denied
California takes Medi-Cal applications through the BenefitsCal online portal, or by mail or hand-delivery to the county social services office. Expect to produce bank statements, property deeds, life insurance policies, pension and Social Security award letters, and tax returns. The renewal form (MC 210) specifically requires proof of income, resources and property, and deductible expenses.8Department of Health Care Services. Medi-Cal Renewal Form MC 210 Reporting a wrong life insurance face value or an incorrect pension amount triggers clarification requests that stall the file. The county has 45 days to decide, and that clock does not pause while it waits on documents from you.
If the county denies your application or cuts your benefits, you have 90 days from the date on the notice of action to request a state fair hearing through the California Department of Social Services.9California Department of Social Services. State Hearing Requests A temporary extension currently allows 120 days for certain redetermination-related hearings. If you’re already on Medi-Cal and file your hearing request before the effective date of the adverse action, the state must keep paying at the current level until the hearing is decided. That “aid paid pending” protection can keep nursing home coverage from lapsing while an appeal moves through the system.