On January 1, 2026, Medi-Cal will restore the asset test, as it existed in 2022, to determine a person’s eligibility to receive, or continue to receive, community based Medi-Cal and skilled nursing residential care Medi-Cal.
The restored asset test does not apply to the Expansion Medi-Cal created by the Affordable Care Act which has no asset test. The asset test applies to both the community based and long-term care Medi-Cal programs
In 2026, the asset test means that individuals with countable, non exempt assets worth more than $130,000 and couples with more than $195,000 in countable, non-exempt assets do not qualify for community based Medi-Cal. Moreover, if there are additional family members living as part of the same household then each of these persons adds $65,000 (just like the spouse) to the exemption, amount.
Next, if one spouse is institutionalized in a skilled nursing facility, the institutionalized spouse can have up to $130,000 in countable non exempt assets and the community (stay at home) spouse can also have a further $157,980 in non exempt assets as a “Community Spouse Resource Allowance” (“CSRA”). In certain circumstances, the CSRA may even be expanded due to spousal impoverishment.
Exempt assets are not counted as part of the $130,000/$195,000 reserve. This includes a person’s primary dwelling, retirement accounts, a burial plot, and household possessions During 2025, Persons who apply for Medi-Cal do so without any asset test and may become eligible without disclosing assets. But, when they file their periodic Medi-Cal renewal application their assets will be required to be disclosed and will then be considered for renewal.
During 2025, persons who transfer assets to reduce the total value of their non exempt assets in anticipation of 2026, will not be subject to the once all too familiar “look back” period that recommences in 2026. Thus, transferring assets in 2025 will not result in any future “transfer penalties” which otherwise would delay a Medi-Cal applicant’s eligibility in 2026 onwards.
Commencing 2026, transfers of assets above the exemption level will again result in a transfer penalty measured in terms of months of skilled nursing long term care Medi-Cal ineligibility. The ineligibility period is determined by dividing the amount transferred that is in excess of the Medi-Cal person’s $130,000 exemption amount by the “Average Private Pay Rate” (“APPR”) in effect at the time of the transfer, presently $13,365 in 2025.
For example, if the total value of a person’s countable nonexempt assets if $150,000 and that person transfers $20,000 to a relative in order to qualify for Medi-Cal, then the ineligibility transfer period would be $20,000 divided by the 2026 APR. It is reduced down to the nearest whole number.
The typical Medi-Cal eligibility strategy is, first, to convert nonexempt assets (e.g., cash and investments) into exempt assets by purchasing, improving, or paying-down such assets. Second, if a person’s countable, nonexempt assets still exceed the applicable threshold then the next approach is to transfer such assets in a manner that does not result in an ineligibility period.
A Medi-Cal eligible person is still subject to Medi-Cal’s special “Income” rules and its “Share of Cost” rules. That is, a person on Medi-Cal may still have a “Share of Cost” to pay for any type of Medi-Cal. Income includes all forms of income, including Social Security and other retirement incomes.
Lastly, when a Medi-Cal participant dies there is the possibility of Medi-Cal asserting a Medi-Cal estate recovery claim. However, since January 1, 2017, Medi-Cal estate recovery is limited to estates that are in probate, and even then, only if the deceased Medi-Cal recipient was not survived by a spouse. Nowadays, Medi-Cal estate recovery claims are infrequent.
California’s possible reinstatement of the Medi-Cal eligibility asset test would bring us back to familiar but undesired Medi-Cal eligibility planning territory. Nothing is yet certain. But the possibility needs careful monitoring and a getting ready to act; perhaps even prior to January 1, 2026.
The foregoing is not legal advice. Consult a qualified elder law attorney for guidance. Dennis A. Fordham, Attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.
