Estate planning. Made simple.
MEDI-CAL PLANNING ATTORNEY IN CALIFORNIA
Estate planning should leave you with less questions, not more.
I help California families create estate plans based around a living trust designed to avoid probate, Medi-Cal estate recovery, and protecting assets.
Licensed 36 years | UCLA School of Law | Flat-fee living trusts | Free Consultation
Can Medi-Cal Take My House ?
Usually, no. Simply receiving Medi-Cal does not give the State the right to take your home.
While You Are Alive
Your primary residence may remain exempt for Medi-Cal eligibility. The details can depend on who lives there and whether you intend to return home.
After Death
Different rules apply. For Californians who die on or after January 1, 2017, estate recovery is generally limited to certain long-term-care-related benefits and assets subject to probate.
A properly funded living trust can keep a home outside probate. But signing a trust is not enough—the deed must actually transfer the home into it.
Source: Welfare & Institutions Code § 14009.5(f)(3); California DHCS
How an Elderly Couple Almost Exposed Their Home to Medi-Cal Estate Recovery
An older West Hills couple came to me after creating a living trust years earlier. One spouse had dementia, the other used a wheelchair, and their adult child was helping them manage their affairs.
Everyone believed the home was already in the trust.
It was not.
The trust had been signed, but the deed was never completed. Because California’s current Medi-Cal estate-recovery rules generally focus on assets that pass through probate, that unfinished step could have exposed the home to a recovery claim after death.
Fortunately, we discovered the problem while there was still time to address it.
The lesson is simple: a trust sitting in a binder does not control a home that was never transferred into it. If you already have a trust, check the deed.
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For many Californians who are 65 or older, disabled, or applying for long-term-care Medi-Cal, the 2026 asset limit is:
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$130,000 for one person
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$195,000 for a two-person Medi-Cal household
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Add $65,000 for each additional qualifying household member
Those limits remain in effect through June 30, 2027.
But this does not mean everything you own is counted toward the limit.
Your primary home, one vehicle, household belongings, and certain retirement assets can be excluded. Cash, bank accounts, investment accounts, second homes, and additional vehicles may count.
So someone could own a valuable Woodland Hills home and still qualify for Medi-Cal because the home's value may not be included in the asset calculation.
Income is also analyzed separately. Being below the asset limit does not automatically mean you qualify.
Married couples should be especially careful before assuming they have “too much.” Different rules can protect additional assets for a spouse who remains at home when the other spouse needs long-term care.
Example
Suppose John owns his $900,000 home, has one car, and has $100,000 in a savings account.
He does not necessarily have $1 million of countable assets.
If his home and car are exempt, his countable assets may be closer to $100,000 — potentially below the 2026 $130,000 individual asset limit.
That is why the right question is usually not:
“How much am I worth?”
It is:
“How much do I own that Medi-Cal actually counts?”
Medi-Cal does not count everything you own. For the Medi-Cal programs subject to the 2026 asset test, some property counts toward the asset limit and other property is excluded.
Assets Medi-Cal May Count
Common countable assets include:
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Cash
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Checking and savings accounts
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Stocks and other investments
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A rental property in Canoga Park or other non-exempt real estate
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A second vehicle
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Other financial resources that are available to you
These assets generally count toward the applicable Medi-Cal asset limit.
Assets Medi-Cal May Not Count
Common exempt or non-countable assets include:
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Your primary home
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One vehicle
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Household furniture, clothing and personal belongings
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Certain retirement accounts when the applicable Medi-Cal requirements are satisfied
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Certain property used in a trade or business
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Certain burial arrangements and other specifically exempt property
Retirement accounts deserve particular attention. An IRA, 401(k), pension or similar account is not automatically treated the same way as an ordinary bank or investment account. How the account is being distributed can affect whether its balance is counted.
The home exemption is also especially important for long-term-care planning. If you enter a nursing home, your home can remain exempt if you intend to return to it. It can also remain exempt when certain people, such as your spouse or dependent relative, continue living there.
Why This Matters
A person can appear wealthy on paper and still have relatively few countable Medi-Cal assets.
For example, someone might own a $1 million home, a car and $100,000 in the bank. If the home and vehicle are exempt, the Medi-Cal analysis may focus primarily on the $100,000 rather than the person's total net worth.
That is why Medi-Cal planning should begin with an asset-by-asset review, rather than simply adding up everything you own.
And before transferring or giving assets away simply to get under the limit, be careful. Different transfer rules apply when someone needs — or may soon need — long-term care.
A properly funded living trust can help protect your home from Medi-Cal estate recovery after death because property held in the trust generally avoids probate. But a revocable living trust does not automatically make otherwise countable assets exempt for Medi-Cal eligibility.
Those are two different rules.
While You Are Alive
Your primary residence in Porter Ranch is generally exempt from the Medi-Cal asset limit whether it is held in your individual name or in a properly structured living trust.
Putting the home into a standard revocable living trust does not create the exemption. The home is generally exempt because Medi-Cal treats a qualifying primary residence differently from ordinary countable assets.
And putting cash, investments or other countable property into your own revocable trust generally does not make those assets disappear for Medi-Cal purposes simply because the word “trust” appears on the account.
After You Die
This is where the living trust can become extremely important.
For Medi-Cal recipients who die on or after January 1, 2017, California generally limits estate recovery to certain assets that are subject to probate.
Property that was properly transferred into a living trust generally passes through the trust rather than through probate.
So if your home is actually titled in your living trust when you die, that can make a major difference in whether the home becomes part of the probate estate exposed to a Medi-Cal recovery claim.
But simply signing a trust is not enough.
The house has to be in the trust.
That usually means reviewing the recorded deed and confirming that title was actually transferred to the trustee of the living trust.
The Important Distinction
A living trust can therefore accomplish something very valuable:
It can help keep the home out of probate.
But it should not be confused with more advanced Medi-Cal asset-protection planning designed to address countable assets, transfers, long-term-care eligibility, or irrevocable trusts.
Those are different problems requiring different tools.
If you need long-term nursing-home care in Woodland Hills and cannot afford to pay privately, Medi-Cal may help pay the cost of your care if you meet its medical and financial eligibility rules.
This is different from Medicare. Medicare may pay for short-term skilled nursing or rehabilitation under certain conditions, but it generally does not pay for an indefinite nursing-home stay when what you primarily need is long-term custodial care.
Medi-Cal can.
You do not necessarily have to spend everything first.
California allows certain assets to remain exempt, including a qualifying primary residence and one vehicle. In 2026, many long-term-care Medi-Cal applicants can also retain up to the applicable asset limit.
Married couples have additional protections. If one spouse enters a nursing home while the other remains at home, California's spousal impoverishment rules may allow the spouse at home to keep substantially more assets and income than the ordinary Medi-Cal limits would suggest.
For 2026, the Community Spouse Resource Allowance is $162,660, and the Minimum Monthly Maintenance Needs Allowance is $4,067 per month, subject to the applicable rules.
Example
Suppose a married couple in Woodland Hills or Porter Ranch has a home, retirement savings and money in the bank. The husband develops dementia and eventually requires nursing-home care.
His wife should not assume they must sell the house or spend virtually everything they have before he can qualify for Medi-Cal.
The home may be exempt. Additional assets and income may be protected for her under the spousal impoverishment rules. The remaining assets then have to be analyzed to determine what actually counts and whether any planning is appropriate.
The important point is this:
Needing nursing-home care does not automatically mean losing everything you own.
But transferring assets at the last minute can create a different problem, because California once again has rules restricting certain transfers made before an application for long-term-care Medi-Cal.
You can give away property before applying for Medi-Cal, but if you may need long-term-care Medi-Cal, doing it casually can create a serious eligibility problem.
Beginning January 1, 2026, California again reviews certain transfers of non-exempt assets made for less than fair market value when someone applies for long-term-care Medi-Cal.
A disqualifying transfer for a Porter Ranch property can result in a period during which Medi-Cal will not pay for nursing-facility-level care.
Not every transfer is penalized
Some transfers are specifically protected.
For example, transferring an exempt asset generally does not create a penalty. Special rules also allow certain transfers of a home to people such as:
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A spouse
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A child under age 21
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A blind or disabled child
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In some circumstances, a sibling who already has an ownership interest and lived in the home
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In some circumstances, a child who lived in the home and provided care that allowed the parent to remain there instead of entering a nursing facility
A transfer made for full fair market value is also very different from simply giving an asset away.
Example
Suppose a widow has $300,000 in savings and becomes concerned that she may eventually need nursing-home care.
She gives $200,000 to her children, assuming that because the money is no longer in her account, she will qualify for Medi-Cal.
That may backfire.
If she later applies for long-term-care Medi-Cal within the applicable look-back period, Medi-Cal can examine the transfer and potentially impose a period during which it will not pay for her nursing-home care.
The family may then face exactly the problem they were trying to avoid: the money is gone, but Medi-Cal is not yet paying.
The important distinction
Reducing countable assets can be part of legitimate Medi-Cal planning.
But giving assets away is not the same thing as planning.
Before transferring a house, investment account, cash or other substantial property, the better approach is to determine:
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Whether the asset actually counts
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Whether the transfer is exempt
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Whether the person may need long-term care soon
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Whether the transfer falls within the Medi-Cal look-back rules
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Whether there is a safer way to accomplish the same goal
And that brings us to the rule that causes most of the confusion: California's 30-month Medi-Cal look-back period.
California’s Medi-Cal look-back rule allows the State to review certain transfers of assets made before someone applies for long-term-care Medi-Cal or enters a nursing facility while already receiving Medi-Cal.
The maximum look-back period is 30 months.
But there is an important 2026 wrinkle: California is phasing the look-back period back in after eliminating the asset test in 2024 and 2025.
Transfers made between January 1, 2024 and December 31, 2025 are not reviewed under the restored transfer rules.
Beginning July 1, 2026, California reviews transfers starting from January 1, 2026, and adds another month to the review period each month. The full 30-month look-back will apply beginning July 1, 2028.
What is Medi-Cal looking for?
The primary concern is whether someone transferred a non-exempt asset for less than fair market value in order to qualify for long-term-care Medi-Cal.
That could include giving money to children, transferring investments, or selling that Canoga Park rental property for substantially less than it is worth.
If Medi-Cal determines that a transfer was disqualifying, the result is generally a period during which Medi-Cal will not pay for nursing-facility-level care. It does not necessarily mean the person loses all Medi-Cal coverage.
Example
Suppose Mom gives her daughter $150,000 in 2026 and later needs nursing-home care.
If Mom applies for long-term-care Medi-Cal while that transfer falls within the applicable look-back period, the county may review the gift to determine whether it creates a period of ineligibility.
But suppose Mom transferred an exempt asset, received full fair market value, transferred property to a person protected by one of Medi-Cal’s exceptions, or can establish that the transfer was made for a reason other than qualifying for Medi-Cal.
The result may be different.
That is why the 30-month rule should not be understood as:
“You cannot transfer anything for 30 months.”
The better rule is:
Certain transfers of non-exempt assets for less than fair market value can affect long-term-care Medi-Cal eligibility if they occur within the applicable look-back period.
Medi-Cal has special rules designed to prevent the spouse who remains in your Porter Ranch home from becoming impoverished simply because the other spouse needs nursing-home care.
In 2026, these spousal impoverishment rules can allow the spouse who remains at home — called the community spouse — to keep substantially more assets and income than the ordinary Medi-Cal limits might suggest.
Assets
For a new 2026 eligibility determination, the community spouse may generally retain up to $162,660 in countable assets under the Community Spouse Resource Allowance.
The spouse receiving long-term care may also retain up to the applicable individual property limit, currently $130,000, after the required transfer period.
Exempt assets, such as a qualifying primary residence, are generally not included in these amounts.
Once eligibility has been established under the spousal impoverishment rules, property held solely by the community spouse generally is no longer counted against the institutionalized spouse's continuing eligibility.
Income
There is also protection for the spouse who remains at home.
If that spouse's income is below the applicable amount, some of the institutionalized spouse's income may be allocated to the community spouse.
For 2026, California's Minimum Monthly Maintenance Needs Allowance is $4,067 per month. The actual amount that can be allocated depends on the couple's income and applicable deductions.
Example
Suppose Robert and Linda own their West Hills home and have $250,000 in savings. Robert develops Alzheimer's disease and eventually requires nursing-home care.
Linda should not assume they must spend their savings down to $130,000 or sell their home before Robert can qualify for Medi-Cal.
Their home may be exempt. The spousal impoverishment rules may allow Linda to retain a substantial portion of their countable assets, while Robert can retain property up to his applicable limit. Depending on their incomes, Robert may also be able to allocate some of his monthly income to Linda.
The result can be dramatically different from simply adding up everything the couple owns and concluding they have “too much money.”
The important point
When one spouse needs long-term care, do not apply the ordinary Medi-Cal asset limit to the couple and assume that is the end of the analysis.
California has separate rules specifically designed to protect the spouse who remains at home.
Yes — but California’s Medi-Cal estate recovery rules are much narrower than they used to be.
For a Medi-Cal recipient who dies on or after January 1, 2017, the State generally seeks recovery only for certain long-term-care-related Medi-Cal benefits and only from assets that are part of the person’s probate estate.
That is a very important limitation.
Property that passes outside probate — for example, property properly held in a living trust, property passing by survivorship, or an account with a valid transfer-on-death or payable-on-death beneficiary — generally is not part of the estate subject to Medi-Cal recovery.
What can Medi-Cal recover?
For someone age 55 or older, recovery is generally limited to Medi-Cal payments for:
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Nursing-facility services
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Home- and community-based services
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Certain related hospital services
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Certain related prescription-drug services
The State cannot simply recover every dollar of Medi-Cal benefits a person ever received.
And DHCS cannot recover more than the lesser of the amount of recoverable Medi-Cal benefits paid or the value of the probate estate.
There are important exceptions
California prohibits estate recovery when the deceased Medi-Cal recipient is survived by:
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A spouse or registered domestic partner
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A child under age 21
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A child of any age who is blind or disabled under the applicable federal definition
DHCS must also provide a process for heirs or survivors to request a hardship waiver in appropriate circumstances.
Example
Suppose Mom received $180,000 of Medi-Cal-covered nursing-home care before she died.
At death, her $900,000 house is properly titled in her living trust and passes to her children through the trust. She has only $25,000 of other property requiring probate.
Medi-Cal does not automatically have a $180,000 claim against the house simply because Mom received $180,000 of benefits.
Under California’s current rules, the recovery analysis generally focuses on the property actually included in Mom’s probate estate.
That is why estate recovery planning and Medi-Cal eligibility planning are related — but they are not the same thing.
The key point
Receiving Medi-Cal does not automatically mean the State gets your estate when you die.
The questions are what benefits you received, when you received them, what property you owned at death, how that property passes, and whether one of the statutory protections applies.
No. Most people do not automatically need an irrevocable trust to qualify for Medi-Cal or protect their home.
A primary residence may already be exempt for Medi-Cal eligibility, and a properly funded revocable living trust can generally keep that home outside probate — which is important because California's current Medi-Cal estate recovery rules generally reach only the probate estate.
An irrevocable trust becomes more relevant when someone has countable assets they want to preserve for the future and is planning far enough ahead.
What an irrevocable trust can do
A properly designed irrevocable trust can place assets beyond the owner's unrestricted ability to take them back or use them.
That distinction matters. Federal Medicaid law provides that if an irrevocable trust permits payments to be made to or for the benefit of the person who created it, the portion that can be used for that person may still be treated as an available resource.
Conversely, if trust property cannot under any circumstances be distributed to or for that person's benefit, transferring property into that portion of the trust is generally treated as a transfer of assets.
That is where the Medi-Cal look-back rules enter the picture.
Simply calling something an “irrevocable trust” does not make the assets protected.
Example
Suppose Dad has his home plus $500,000 in investments.
Putting everything into his ordinary revocable living trust does not turn the $500,000 into exempt property. Dad still controls the trust and can take the money back.
An appropriately designed irrevocable trust may eventually allow some assets to fall outside the Medi-Cal resource calculation — but transferring those assets can trigger the long-term-care look-back rules.
If Dad needs nursing-home care six months later, the trust may have created a problem rather than solved one.
If he plans sufficiently in advance, the analysis can be very different.
What about a Medi-Cal Asset Protection Trust?
You may see these trusts called Medi-Cal Asset Protection Trusts, or MAPTs.
That is not a magic statutory trust. It is essentially an irrevocable trust designed around the Medi-Cal rules so that selected assets are no longer available to the person seeking benefits.
These trusts can be useful in the right situation, but they involve tradeoffs involving:
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Control over the property
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Access to principal
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The Medi-Cal transfer and look-back rules
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Income-tax consequences
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Capital-gains and basis planning
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Estate-tax inclusion and potential step-up in basis
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Who will serve as trustee
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What happens if circumstances change later
A well-designed plan may be able to preserve some tax advantages while addressing Medi-Cal eligibility, but that requires careful drafting. “Irrevocable” by itself is not a strategy.
For many families, ordinary estate planning is enough. For others — particularly those with substantial countable assets and time to plan before long-term care is needed — an irrevocable trust may be worth considering.
Yes, but transferring your house to your children is usually not the first thing you should do simply because you are worried about Medi-Cal.
Under California's Medi-Cal rules, transferring property that is exempt at the time of the transfer generally does not create a transfer penalty. Because a qualifying primary residence is often exempt, transferring that home may not affect long-term-care Medi-Cal eligibility.
But that does not mean giving the house to your children is a good idea.
That Woodland Hills house may already be exempt
If the home is your primary residence, Medi-Cal may already exclude it from the asset calculation.
That means you could give away an asset that Medi-Cal was not counting against you in the first place.
And if your concern is Medi-Cal estate recovery after death, you may not need to give the house away for that reason either. A home properly titled in a living trust generally passes outside probate, while California's current Medi-Cal estate recovery rules generally apply only to assets in the probate estate.
Giving the house away creates other risks
Once you transfer the house outright to a child, it belongs to the child.
That can expose the property to the child's:
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Creditors
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Lawsuits
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Divorce
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Bankruptcy
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Financial problems
You may also lose control over whether the property is sold, refinanced or transferred later.
There can be significant tax consequences as well. A lifetime gift generally carries the parent's existing income-tax basis over to the child. Property inherited at death may instead qualify for an adjustment in basis under federal tax law.
California's Proposition 19 can also cause property-tax reassessment when real estate is transferred from parent to child unless the transfer qualifies for the limited parent-child exclusion.
So avoiding one potential Medi-Cal problem can accidentally create several new ones.
Example
Mom owns a West Hills home worth $1 million that she purchased decades ago for $150,000.
She hears that Medi-Cal might “take the house,” so she signs a deed giving the property to her son.
The house may have already been exempt for Medi-Cal eligibility.
If it had instead remained properly funded in Mom's living trust, it could generally have passed outside probate at her death.
By giving it away during her lifetime, Mom has surrendered ownership and may have created income-tax, property-tax and creditor issues that did not previously exist.
In other words, she may have solved a problem she did not have.
There are special transfer rules
The analysis changes if the home is no longer exempt.
California's Medi-Cal rules contain special protections allowing a former home to be transferred without a long-term-care transfer penalty in certain circumstances, including transfers to:
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A spouse
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A child under age 21
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A blind or permanently and totally disabled child
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A qualifying sibling who has an ownership interest in the home
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A qualifying child who lived in the home and provided care that allowed the parent to remain at home rather than enter a nursing facility
Those exceptions have specific requirements.
The takeaway
Do not transfer your West Hills home to your children simply because someone told you that you have to “get it out of your name” to qualify for Medi-Cal.
First determine whether the home is already exempt, whether it is properly funded into your estate plan, whether a transfer would fall within the Medi-Cal rules, and what tax and ownership consequences the transfer would create.
Sometimes a transfer makes sense.
Sometimes the smartest Medi-Cal planning decision is to leave the house exactly where it is.
Income matters, but California does not use one simple income ceiling that automatically disqualifies someone from long-term-care Medi-Cal.
A person with income above the level for no-cost Medi-Cal may still qualify for nursing-home Medi-Cal through a share of cost.
How share of cost works
Medi-Cal looks at the applicant’s countable monthly income and subtracts certain permitted deductions and allowances.
The remaining amount may become the person's monthly share of cost — essentially the amount the person must contribute toward nursing-home care before Medi-Cal pays the covered balance.
For someone who remains in long-term care for the entire month, California currently allows a $35 personal-needs allowance. Other deductions may include health-insurance premiums and, when applicable, allocations for a spouse or certain family members.
So having Social Security, pension income or other monthly income does not necessarily prevent someone from qualifying.
Example
Suppose Dad receives $4,500 per month from Social Security and a pension and later requires permanent nursing-home care.
He should not assume:
“I make $4,500 per month, so I cannot get Medi-Cal.”
If he otherwise qualifies, Medi-Cal may calculate how much of his income must be contributed toward his care each month after permitted deductions.
Dad may therefore qualify for Medi-Cal while still having a monthly share of cost.
That can be extremely important when the nursing home's monthly charge is substantially more than Dad's monthly income.
Married couples are different
If Dad has a spouse who remains at home, additional protections apply.
The community spouse generally keeps income received in that spouse's own name. If the community spouse's income is below the permitted maintenance level, some of Dad's income may also be allocated to the spouse.
For 2026, California's Minimum Monthly Maintenance Needs Allowance is $4,067 per month, although the actual allocation depends on the couple's circumstances.
The takeaway
Do not assume you make “too much money” for long-term-care Medi-Cal simply because your monthly income exceeds an ordinary Medi-Cal income limit.
For nursing-home Medi-Cal, the more useful questions are:
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How much income is actually countable?
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What deductions and spousal protections apply?
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What will the monthly share of cost be?
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And does the applicant separately satisfy Medi-Cal's asset and medical-need requirements?
For many nursing-home residents, income determines how much they contribute toward their care — not simply whether they can receive Medi-Cal at all.
The best time to start Medi-Cal planning is before a health crisis forces you to make decisions quickly.
That does not necessarily mean creating an irrevocable trust years in advance. For many families, planning starts much more simply: identifying which assets Medi-Cal counts, confirming that the home is properly titled, reviewing the living trust, understanding spousal protections, and deciding whether any advanced planning is actually necessary.
Why planning earlier helps
California again applies transfer rules to long-term-care Medi-Cal. Certain transfers made on or after January 1, 2026 can affect eligibility, and California is gradually restoring a 30-month look-back period.
The more time you have before nursing-home care is needed, the more planning options you generally have.
Early planning can also help avoid rushed decisions such as:
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Giving the Canoga Park house to the children unnecessarily
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Liquidating assets that were already exempt
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Making gifts that create a Medi-Cal penalty
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Creating an irrevocable trust without understanding the loss of control
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Triggering avoidable income-tax or property-tax consequences
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Discovering too late that the house was never transferred into the living trust
But it is not necessarily too late if someone already needs care
A nursing-home admission does not mean all planning opportunities disappear.
The home may still be exempt. A married couple may have significant spousal impoverishment protections. Some transfers are exempt from the transfer rules. Countable assets may sometimes be spent on legitimate expenses or converted into exempt assets.
So even in a crisis, the first step should usually be to determine what actually needs fixing before moving assets around.
Example
Suppose a Woodland Hills couple in their late 70s owns their home and has $450,000 in savings and investments.
Neither spouse currently needs long-term care, but one has begun showing signs that additional care may eventually be necessary.
That is a much better time to review the plan than after a nursing-home admission.
They can determine which assets are exempt, make sure the house is properly funded into their living trust, understand what would happen if one spouse needs care, and decide whether more advanced planning — including an irrevocable trust — provides enough benefit to justify the tradeoffs.
They may ultimately decide not to do anything complicated at all.
That is still successful planning.
2026 makes timing particularly important
California restored Medi-Cal asset limits on January 1, 2026. Through June 30, 2027, the individual limit is generally $130,000 for the programs subject to the asset test.
Beginning July 1, 2027, that individual limit is scheduled to fall to $21,000.
For someone with substantial countable assets who expects to need long-term care in the coming years, waiting until the nursing-home application is being completed may unnecessarily limit the available choices.
The takeaway
You do not need to wait until someone is sick enough to enter a nursing home in West Hills to think about Medi-Cal.
And you should not assume that being in a nursing home means it is too late.
The best planning window is while you still have time, capacity and choices.
Yes. Having a living trust does not by itself prevent you from qualifying for Medi-Cal.
Medi-Cal looks at the assets you own and whether each asset is countable or exempt. Putting those assets into your own revocable living trust generally does not change that analysis.
A living trust does not hide countable assets
If you created a revocable living trust and still have the power to revoke it and use the trust property, Medi-Cal generally treats the trust assets as available to you.
So putting $300,000 of cash or investments into your revocable trust does not turn those assets into exempt property.
The word “trust” is not a Medi-Cal exemption.
But exempt assets can still be exempt
The opposite is also important.
If your primary residence qualifies as an exempt asset, putting the home into your revocable living trust generally does not suddenly make the house countable merely because it is owned through the trust.
Medi-Cal still looks at the nature of the underlying asset.
Example
Suppose Susan's living trust owns:
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Her $1 million primary residence
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One car
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$100,000 in savings
She should not assume she has $1.1 million of countable Medi-Cal assets simply because all of those assets are listed in her trust.
Her qualifying home and vehicle may be exempt, while the $100,000 savings account may be countable.
Now suppose the trust also contains a $300,000 investment account.
That account does not become exempt simply because Susan transferred it into her living trust. If Susan can revoke the trust and take the investments back, Medi-Cal generally treats those assets as available to her.
The important distinction
A revocable living trust is primarily an estate-planning and probate-avoidance tool, not a way to make countable assets disappear for Medi-Cal eligibility.
It can still be extremely important in Medi-Cal planning because property properly held in the trust generally avoids probate, which can matter for Medi-Cal estate recovery after death.
But for eligibility while you are alive, the key question remains:
What does the trust own — and would those assets be countable or exempt if you owned them directly?
If you have too many countable assets to qualify for long-term-care Medi-Cal, you can generally spend the excess money on yourself, your spouse, your debts, or things you legitimately need.
The key distinction is between spending your money for fair value and simply giving it away.
California DHCS specifically identifies legitimate spend-down expenses such as:
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Medical and dental bills
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Rent or mortgage payments
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Paying off a car loan or other debts
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Home repairs or improvements
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Clothing and household items
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Education expenses
You can also generally use money to purchase property that Medi-Cal does not count, provided the transaction is legitimate and the resulting asset actually qualifies as exempt under Medi-Cal rules.
You do not have to waste the money
“Spend down” does not mean going to Las Vegas and putting everything on red.
It means reducing countable assets to the applicable Medi-Cal limit while receiving reasonable value for what you spend.
For example, someone might:
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Replace an old vehicle
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Repair a roof or plumbing
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Make accessibility improvements to the home
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Pay legitimate credit-card or other debts
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Pay medical expenses
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Purchase needed furniture, appliances, clothing or personal items
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Pay down a mortgage
If a spouse remains at home, the spousal impoverishment rules may also allow significant assets to be retained rather than spent at all.
Example
Suppose Mom has $180,000 in countable savings and needs nursing-home care.
If her applicable asset limit is $130,000, she may need to reduce approximately $50,000 of countable assets.
Instead of giving $50,000 to her children, she might use part of that money to replace her aging car, repair the house, pay outstanding medical bills and eliminate debt.
She has reduced her countable assets, but she received something of value in return.
That is very different from writing her son a $50,000 check.
A gift of a non-exempt asset for less than fair market value can trigger California's long-term-care transfer rules and potentially delay Medi-Cal payment for nursing-facility-level care.
Do not spend down assets that Medi-Cal was not counting
This is another common mistake.
Before selling, spending or transferring anything, determine whether the asset is actually countable.
Your qualifying primary residence, one vehicle, household belongings and certain retirement funds may already be excluded.
Someone who owns a $1 million home and $100,000 in savings should not start selling property merely because their total net worth exceeds $130,000.
Medi-Cal cares about countable assets, not simply net worth.
The takeaway
If you need to reduce assets for long-term-care Medi-Cal, legitimate spending for yourself or your spouse can be very different from giving assets away.
The goal is not:
“Get rid of everything.”
It is:
“Identify what Medi-Cal actually counts, preserve what can legally be preserved, and reduce only the excess countable assets in a way that does not create a transfer penalty.”
Yes. A nursing-home admission does not mean it is too late to do Medi-Cal planning.
There may still be important steps available to qualify for long-term-care Medi-Cal, preserve exempt property, protect a spouse who remains at home, and avoid unnecessary transfers or spend-down.
Start by figuring out what actually counts
Before moving anything, identify:
-
Countable assets
-
Exempt assets
-
Monthly income
-
Existing gifts or transfers
-
How the home is titled
-
Whether there is a spouse at home
-
What the living trust and power of attorney actually authorize
A primary residence may still be exempt if the nursing-home resident intends to return home, or if a spouse or dependent relative lives there. DHCS also allows legitimate spend-down of countable assets on things such as medical bills, mortgage payments, home repairs, household needs and debts.
A married person may have substantially more options
If one spouse is in a nursing facility and the other remains at home, California's spousal impoverishment rules can protect additional assets and income for the spouse at home.
That can make the difference between unnecessarily spending down family savings and preserving a substantial amount for the spouse who still has to pay the mortgage, utilities, food and other living expenses.
Do not start giving things away
Once someone is already in a nursing home, casually transferring money or property can be especially dangerous.
California again reviews certain transfers of non-exempt assets for less than fair market value when determining long-term-care Medi-Cal eligibility. A problematic transfer can create a period during which Medi-Cal will not pay for nursing-facility-level care. Transfers of exempt assets are not penalized, and other exceptions may apply.
So the solution is not automatically:
“Get everything out of Mom's name.”
Sometimes the correct move is to spend countable assets legitimately. Sometimes assets can be transferred to a spouse or another protected person. Sometimes an asset is already exempt and should simply be left alone.
Example
Mom has already entered a nursing home. She owns her Woodland Hills home, has $200,000 in savings, and receives Social Security.
Her daughter assumes the family must immediately deed the house to the children and start giving away the savings.
That could be exactly backward.
The house may already be exempt. Mom may be able to spend excess countable assets on legitimate needs rather than gifting them. If Mom is married, additional assets may be protected for her spouse. And any transfer made after January 1, 2026 has to be analyzed under California's restored long-term-care transfer rules before the family acts.
Capacity and legal authority matter
If your parent still has legal capacity, planning options may be broader because your parent can make and authorize decisions personally.
If your parent has lost capacity, the analysis changes. A child cannot simply move Mom's assets because he or she is “the power of attorney.”
California Probate Code § 4264 requires a power of attorney to expressly authorize certain acts, including making gifts, creating or modifying a trust, changing survivorship rights, and changing beneficiary designations.
That makes reviewing the actual estate-planning documents particularly important in a crisis case.
The takeaway
Being admitted to a nursing home is not the end of the planning window.
But it does change the job.
At that point, the goal is to quickly identify what is exempt, what is countable, what can still be protected legally, what prior transfers may matter, and who actually has authority to act.
The biggest mistake is often not waiting too long.
It is panicking and moving assets before anyone has figured out whether they needed to be moved at all.
Not necessarily. In California, retirement accounts such as IRAs, 401(k)s and other work-related pension plans can often be excluded from the Medi-Cal asset limit if the account is being handled correctly.
The important issue is usually whether you are actually taking the required or appropriate periodic distributions.
Retirement accounts can be treated differently from ordinary investment accounts
A regular brokerage account may be a countable asset.
A qualifying retirement account may be treated as unavailable for Medi-Cal asset-limit purposes if you are receiving:
-
The required minimum distribution, when applicable; or
-
Regular periodic payments of principal and interest that satisfy Medi-Cal's rules.
DHCS currently tells applicants that retirement funds generally do not count when the owner is receiving regular payments.
But simply leaving the money untouched can create a problem.
California's Medi-Cal rules provide that if an applicant or beneficiary has access to retirement funds but chooses to defer payments, the available value of the retirement account can be treated as a countable resource.
So someone with a large IRA should not assume:
“It is a retirement account, so Medi-Cal ignores it.”
Whether it is excluded can depend on how distributions are being taken. DHCS reaffirmed in January 2026 that counties should once again apply its existing rules governing IRAs, self-employed retirement plans and work-related pension plans when determining Non-MAGI Medi-Cal eligibility.
The payments themselves can still count as income
This is an important distinction.
The balance of the retirement account may be excluded from the asset calculation when the distribution requirements are satisfied.
But the money distributed from the account can still be treated as income when Medi-Cal calculates eligibility or a nursing-home resident's share of cost.
Example
Suppose Dad has:
-
A $900,000 home
-
A $600,000 IRA
-
$90,000 in savings
-
Social Security income
He should not automatically assume that he has $690,000 of countable assets.
His home may be exempt.
If his IRA is being distributed in the manner required by Medi-Cal, the IRA balance may also be treated as unavailable.
That could leave the $90,000 savings account as the primary countable asset.
The result is dramatically different from simply adding up Dad's entire net worth.
What about a Roth IRA?
Roth IRAs require extra attention because federal tax law generally does not require lifetime minimum distributions from the original Roth IRA owner.
California Medi-Cal guidance nevertheless allows a Roth IRA to be treated as unavailable when appropriate periodic distributions of principal and interest are established.
So “I don't have an RMD” does not necessarily mean the entire Roth IRA must count — but the account needs to be analyzed under the Medi-Cal rules.
The takeaway
Do not cash out an IRA, 401(k), pension or other retirement account just because you are applying for Medi-Cal.
And do not assume every retirement account is automatically exempt.
First determine what type of account it is, whether distributions are required, whether appropriate payments are actually being taken, and how those payments will affect income or share of cost.
A retirement account worth hundreds of thousands of dollars can produce a very different Medi-Cal result from an ordinary investment account worth the same amount.
Yes. Owning rental property does not automatically prevent you from qualifying for Medi-Cal.
But beginning January 1, 2026, California again considers real estate other than your exempt principal residence when determining eligibility for many Non-MAGI Medi-Cal programs, including long-term-care Medi-Cal.
The result depends on what the property is worth, how it is used, whether it qualifies for an exemption, and how much rental income it produces.
A rental property is not automatically exempt
A second house, condominium, apartment building or other rental property in Canoga Park is generally different from your primary residence.
Your principal residence may be completely exempt. A rental property generally must either fit within one of Medi-Cal's other property exemptions or its countable value will be included with your other assets.
California restored these property rules on January 1, 2026. DHCS specifically instructed counties to resume applying the pre-2024 rules governing rental property.
There is a limited exemption for income-producing real estate
For non-business real estate, California can exempt up to $6,000 of net market value if the property produces net annual income of at least 6% of its net market value.
If the property is worth more than $6,000 after allowable encumbrances, however, the value above the $6,000 exemption is generally countable.
So merely renting out a $500,000 second home does not make the entire $500,000 property exempt.
Rental property used in a genuine business can be different
California also has a separate exemption for property actually used in a trade or business or as a means of self-employment.
That can potentially exempt substantially more property.
But calling a rental an “investment business” does not automatically work. DHCS has specifically distinguished genuine self-employment or business property from property held simply as an investment. A former residence that is merely rented out, for example, is not automatically exempt as business property.
So the facts matter.
The rental income also matters
Even when the underlying real estate is exempt, the net rental income can still count as income for Medi-Cal purposes.
California allows certain expenses to be deducted from gross rent when calculating net rental income, including:
-
Property taxes and assessments
-
Mortgage interest — but generally not principal
-
Insurance
-
Certain utilities
-
Repairs and upkeep
The resulting net income may affect eligibility or, for someone receiving long-term-care Medi-Cal, the amount of the monthly share of cost.
Example
Suppose Dad owns:
-
His $950,000 West Hills residence
-
A rental condominium
-
$75,000 in savings
His primary residence may be exempt.
But the rental condominium requires a separate analysis.
If it is simply investment property, most of its countable net value may have to be included with Dad's other assets. If the property legitimately qualifies as business or self-employment property, the treatment may be different.
And regardless of how the property itself is treated, the net rental income can still affect Dad's Medi-Cal calculation.
Dad therefore should not assume either:
“I own rental property, so I can't qualify.”
or
“It's producing income, so Medi-Cal won't count it.”
Both statements can be wrong.
The takeaway
You can own rental property and still qualify for Medi-Cal.
But rental real estate is one of those assets that should be reviewed individually because its equity, its use, its income, and whether it qualifies as business property can all change the result.
And before selling or transferring a rental simply to qualify, it is worth determining whether the property actually needs to be moved at all.
You apply for long-term-care Medi-Cal through your county Medi-Cal office, just as you would for other Medi-Cal coverage. In Los Angeles County, applications are handled by the Department of Public Social Services (DPSS).
You can apply online through BenefitsCal, by telephone, by mail, or in person. Many nursing homes can also provide the application and help families begin the process.
Make sure Medi-Cal knows you are applying for long-term care.
This matters.
On the application, identify that the applicant needs long-term care or home- and community-based services and provide information about the nursing facility, including the admission date.
Los Angeles County specifically instructs long-term-care applicants to answer “Yes” when the application asks whether they need help with long-term care or home- and community-based services.
Be prepared to document income and assets
Beginning January 1, 2026, California again requires long-term-care Medi-Cal applicants to report assets.
Depending on the applicant's circumstances, the county may request documents concerning:
-
Checking and savings accounts
-
Brokerage and investment accounts
-
Retirement accounts
-
Real estate
-
Vehicles
-
Annuities or life insurance
-
Social Security and pension income
-
Medicare and other health insurance
-
The spouse's income and assets
-
Recent transfers or gifts
-
The nursing-home admission
Do not assume every asset listed on the application counts against eligibility. The county still has to determine whether each asset is countable or exempt.
The county determines financial eligibility
For someone applying in 2026, the county will generally examine whether the applicant satisfies the applicable asset limit, income rules and long-term-care requirements.
If the applicant is married and the spouse remains at home, the county should also apply the spousal impoverishment rules, which can protect substantially more assets and income for the spouse at home.
If the applicant's countable assets are above the limit, that does not necessarily mean the application is hopeless. The family may still be able to spend down excess countable assets legitimately or use another permissible planning strategy.
What you generally should not do is start giving away money or transferring property simply because a nursing home tells you that Mom has “too many assets.”
Transfers can have consequences under California's restored long-term-care transfer rules.
Example
Dad enters a nursing home in Woodland Hills after a hospitalization.
His daughter learns that Medicare will cover only a limited period of skilled nursing care and that Dad may need to remain in the facility permanently.
She can begin a long-term-care Medi-Cal application through Los Angeles County DPSS or BenefitsCal.
But before she starts moving Dad's assets around, she gathers his bank statements, retirement-account information, deed, living trust, income information and power of attorney.
That review reveals that Dad's home may be exempt, his retirement account may receive special treatment, and only part of what the family thought was his “net worth” may actually be countable.
That is a much better starting point than transferring assets first and asking questions later.
If your parent cannot complete the application personally
A family member or other representative may be able to assist with the application.
But applying for benefits is different from having legal authority to transfer the applicant's property, change a trust, make gifts or alter beneficiary designations.
If the applicant lacks capacity, review the actual power of attorney or other authority before making planning transactions.
Do not wait unnecessarily
Long-term-care bills can accumulate quickly. If someone may qualify for Medi-Cal, begin investigating eligibility promptly.
In appropriate cases, retroactive Medi-Cal coverage may also be available for earlier months, so ask the county whether coverage can begin before the month in which the application is filed.
The application itself is not usually the hardest part.
The hard part is making sure the assets, income, transfers, spouse protections and estate plan are analyzed correctly before someone makes an irreversible financial decision.
Selling your home does not automatically make you ineligible for Medi-Cal.
But there is an important catch:
Once you sell an exempt home, the cash you receive can become a countable asset.
California gives you a limited period to replace the home.
You generally have six months to buy another principal residence
Under California Medi-Cal regulations, proceeds from the sale of your principal residence can remain exempt for six months from the date you receive them if you intend to use the money to purchase another principal residence.
The proceeds can also be used for reasonable costs associated with the new home, including moving expenses, necessary furnishings, repairs and alterations.
If you do not use the money toward another qualifying home within that period, the remaining proceeds can become countable assets.
Example
Suppose Mom owns a West Hills home worth $900,000 and is receiving Medi-Cal.
The house itself is exempt.
She sells it for $900,000 and moves into assisted living.
If Mom simply leaves the $900,000 sitting in her bank account and does not intend to purchase another principal residence, she may now have $900,000 of countable cash.
The asset changed from:
an exempt home
to:
potentially countable sale proceeds.
That could affect her continued Medi-Cal eligibility.
But suppose instead Mom sells the West Hills house because she wants to move closer to her daughter in Ventura.
If she intends to use the proceeds to purchase another principal residence and completes the purchase within the permitted six-month period, those proceeds can remain exempt during that period.
What if I do not want another house?
Then the analysis changes.
The proceeds may need to be reduced to the applicable Medi-Cal asset limit through legitimate spending or other permissible planning.
Depending on the circumstances, that might include paying:
-
Medical and care expenses
-
Debts
-
A mortgage or other obligations
-
Home-related expenses
-
Other legitimate expenses for yourself or your spouse
For long-term-care Medi-Cal, simply giving the sale proceeds to your children can be dangerous because transfers of non-exempt assets for less than fair market value may trigger the Medi-Cal transfer and look-back rules.
The timing matters
Selling a house while receiving Medi-Cal is therefore not necessarily a problem.
But selling an exempt $900,000 house and turning it into $900,000 of cash can dramatically change the Medi-Cal analysis.
Before selling, it is worth deciding what will happen to the proceeds.
The takeaway
Medi-Cal generally does not prevent you from selling your home.
But the exemption belongs to the qualifying home, not automatically to cash forever.
If you plan to purchase another principal residence, California generally gives you six months to reinvest the proceeds.
If you do not plan to buy another home, determine how the proceeds will affect your Medi-Cal eligibility before the sale closes, when you still have the most planning options.
Yes. Paying a family member or caregiver for actual care can be legitimate Medi-Cal planning if the payment is reasonable compensation for real services — not a disguised gift.
For long-term-care Medi-Cal, the important question is whether you received fair value in return for the money you paid.
California's regulations recognize reimbursement for care or benefits as adequate consideration when there was an agreement or understanding that the caregiver would be paid and the value of the services was reasonably equivalent to the amount transferred.
Paying for care is different from giving money away
Suppose Mom pays her adult daughter $30 per hour for helping with:
-
Bathing and dressing
-
Meal preparation
-
Transportation
-
Medication assistance
-
Shopping and errands
-
Household assistance
-
Supervision necessitated by dementia
-
Other legitimate personal-care services
If the daughter actually performs those services and the compensation is reasonable for the work performed, the payments may represent fair value received by Mom, rather than gifts to the daughter.
That is very different from Mom simply writing her daughter a $100,000 check.
A gift of a non-exempt asset for less than fair market value can create a Medi-Cal transfer penalty. Payment of reasonable compensation for services actually received generally should not.
Document the arrangement
This is where families can get themselves into trouble.
If substantial money will be paid to a child or other family caregiver, it is much better to establish the arrangement before large payments begin.
A written caregiver agreement can identify:
-
Who will provide the care
-
What services will be provided
-
The hourly or other compensation rate
-
How hours will be recorded
-
When payment will be made
-
Whether expenses will be reimbursed
-
How the arrangement can be changed or terminated
The family should also keep records showing the services actually performed and the payments actually made.
There is no prize for making the arrangement complicated. The goal is simply to be able to show:
Mom paid a reasonable amount for real care she actually received.
Be especially careful about paying for years of past care
Suppose a daughter has cared for Mom without charge for five years.
Mom then needs nursing-home care and writes her daughter a $200,000 check, calling it “payment for everything you've done for me.”
That is much harder.
California's regulation specifically requires evidence of an agreement or understanding that reimbursement would be made when a later transfer is claimed as reimbursement for previously provided care.
Without evidence of that prior understanding, Medi-Cal may view some or all of the payment as a gift rather than payment of a legitimate debt.
That is one reason planning prospectively is much cleaner than inventing a caregiver agreement after a nursing-home admission.
Example
Dad has dementia but remains at home in Canoga Park because his daughter provides approximately 25 hours of care each week.
Comparable caregivers in the area charge about $30 per hour.
Dad and his daughter enter into a written agreement providing reasonable compensation for the services she actually performs. She keeps a record of her hours, and Dad pays her regularly.
Over time, Dad's countable savings decrease because he is legitimately purchasing care that allows him to remain at home.
That is fundamentally different from Dad transferring the same amount of money to his daughter merely to reduce his assets below the Medi-Cal limit.
In one case, Dad received something of reasonably equivalent value.
In the other, he gave his assets away.
Do not manufacture an inflated rate
Paying your daughter $500 an hour to make lunch because you want to move $200,000 out of Dad's account is not transformed into fair-market-value compensation merely because a contract says so.
California requires the value of the care or benefits received to be reasonably equivalent to the value transferred.
The compensation should therefore have some relationship to what comparable services would reasonably cost.
Payments to a spouse require additional analysis
California treats spouses differently from adult children and other caregivers.
Under Medi-Cal regulations, a spouse is a “responsible relative,” and the specific rule permitting reimbursement for previously provided care excludes reimbursement to a responsible relative.
There are also separate spousal impoverishment and asset-transfer rules that may provide a much better way to protect the spouse at home.
So a married couple should not simply create a spouse-caregiver contract and assume it will receive the same treatment as payment to an adult child or unrelated caregiver.
There may also be tax and employment consequences
A legitimate caregiver arrangement is not just a Medi-Cal document.
Depending on the facts, compensation may be taxable income to the caregiver, and payroll, household-employment or other tax rules may apply.
Those issues should be addressed rather than paying large amounts of cash “under the table.”
The takeaway
Paying a child or caregiver for real services can be perfectly legitimate.
But the safest arrangement looks like an actual business transaction:
real care + reasonable compensation + records showing what was done and what was paid.
What you want to avoid is a large transfer made after the fact with no documentation and a new label attached to it:
“That wasn't a gift. We were paying her for the last ten years.”
Medi-Cal does not have to accept the label. It can look at what actually happened.
Yes. Medi-Cal planning may still be possible even if a parent has dementia or has lost legal capacity — but who has authority to act becomes critical.
A diagnosis of dementia does not automatically mean someone lacks legal capacity.
California law presumes adults have capacity, and specifically recognizes that a person with a mental disorder may still be capable of signing contracts, transferring property, or creating a trust. Capacity depends on whether the person can understand the particular decision, its consequences, risks, benefits and alternatives.
If your parent still has capacity
Your parent can generally make his or her own Medi-Cal planning decisions.
That may include reviewing assets, changing how property is held, spending countable assets appropriately, updating estate-planning documents, or considering whether more advanced planning makes sense.
This is why early planning can matter when someone has been diagnosed with dementia but is still able to understand and make financial decisions.
If your parent has lost capacity
Then you have to determine who legally has authority to act.
A properly drafted durable power of attorney may allow an agent to:
-
Manage bank and investment accounts
-
Pay expenses and debts
-
Buy or sell property
-
Deal with retirement benefits
-
Apply for Medi-Cal and other public benefits
But some of the most powerful Medi-Cal planning transactions require specific authority in the document.
California Probate Code § 4264 requires express authorization before an agent can do things such as:
-
Make gifts
-
Create, modify, revoke or terminate a trust
-
Fund certain trusts
-
Change survivorship rights
-
Change beneficiary designations
So having “power of attorney” does not automatically mean the child can do whatever Medi-Cal planning might require.
Example
Mom has dementia and is entering a nursing home in West Hills.
Her son is named agent under her durable power of attorney and assumes that means he can transfer $200,000 to himself and his sister to help Mom qualify for Medi-Cal.
Not necessarily.
The power of attorney might authorize him to pay Mom's bills, manage her accounts and apply for benefits but not authorize gifts.
If the document does not expressly grant the required power, making the transfer anyway can create problems involving Medi-Cal eligibility, fiduciary duty, and potentially elder abuse.
The first step should be reviewing the actual document — not simply relying on the words “power of attorney.”
What if there is no adequate power of attorney?
Planning may still be possible, but court involvement may be required.
California's substituted judgment procedure allows a conservator or another interested person to ask the probate court to authorize certain transactions for a person who lacks capacity.
Those transactions can include gifts, creation of trusts, changes to an estate plan, purchases, sales and other financial actions when the statutory requirements are satisfied.
The court considers factors such as the person's existing estate plan, prior wishes and gifting practices, the needs of the person and dependents, and whether the proposed transaction leaves sufficient assets for the person's care.
A married couple may have another option
California also has a separate court procedure for certain transactions involving community property when one spouse lacks capacity.
In some cases, the spouse who still has capacity can petition the court to authorize a particular transaction without first establishing a full conservatorship. Estate-planning transactions are still subject to protections similar to the substituted-judgment rules.
That can be particularly useful when one spouse develops dementia and the other spouse is trying to preserve assets and arrange long-term care.
The takeaway
Dementia does not automatically end Medi-Cal planning.
The real questions are:
-
Does the parent still have capacity for the particular decision?
-
If not, is there a durable power of attorney?
-
What powers does that document actually grant?
-
Who controls the living trust and other assets?
-
Is a proposed transaction permitted under Medi-Cal's rules?
-
If existing authority is insufficient, can the court authorize the transaction?
The earlier these questions are addressed, the more options a family generally has. But even after capacity has been lost, it may not be too late.
Sometimes. Regular Medi-Cal does not simply pay the monthly rent at an assisted-living facility. But California has an Assisted Living Waiver (ALW) that can pay for certain care and support services for eligible Medi-Cal recipients who would otherwise require nursing-facility-level care.
What the Assisted Living Waiver can cover
The ALW can pay for services such as:
-
Personal care
-
Help with activities of daily living
-
Homemaker services
-
Medication assistance
-
Care coordination
-
Other health-related support services
The goal is to allow someone who needs a nursing-home level of care to live in a more residential setting instead.
Medi-Cal does not pay the room and board
This is one of the most important limitations.
The participant generally must have enough income to pay the assisted-living facility's room-and-board charge, while the ALW pays for the covered care services.
So when a facility advertises that it “accepts Medi-Cal,” that does not necessarily mean Medi-Cal pays the entire monthly assisted-living bill.
Who can qualify
California currently requires an ALW participant to:
-
Be at least 21 years old
-
Have full-scope Medi-Cal with zero share of cost
-
Require a level of care comparable to someone receiving Medi-Cal-funded nursing-facility care
-
Be able to live safely in an assisted-living setting
-
Live in a county where the program operates
-
Enroll through an approved Assisted Living Waiver provider
Los Angeles County participates in the program, along with 14 other California counties.
Not every assisted-living facility participates
This is another major practical limitation.
The facility must participate in the Assisted Living Waiver program. A family cannot simply choose any assisted-living community and expect Medi-Cal to pay for care there.
California maintains a list of approved Residential Care Facilities for the Elderly and Adult Residential Facilities participating in the program.
There is also a waitlist
The ALW has a limited number of enrollment slots.
DHCS currently warns that new applicants may face a waitlist, although additional waiver slots are released periodically to participating Care Coordination Agencies.
That means the program can be extremely valuable, but it is not something a family should assume will be immediately available when a crisis occurs.
Example
Dad has dementia and can no longer safely live alone in his Woodland Hills home.
He needs substantial help with bathing, dressing, medications and supervision, but his family would prefer assisted living rather than placing him in a skilled nursing facility.
If Dad qualifies for full-scope Medi-Cal with no share of cost, meets nursing-facility-level-of-care requirements, and obtains an Assisted Living Waiver slot at a participating facility, Medi-Cal may pay for much of the care component.
Dad would still generally be responsible for his room and board.
That can make assisted living substantially more affordable than paying privately for both housing and care — but the family needs to confirm eligibility, find a participating facility, and obtain an available waiver slot.
The takeaway
Medi-Cal can help pay for assisted living in California, but not through ordinary blanket coverage of assisted-living rent.
The main program is the Assisted Living Waiver, and eligibility depends on medical need, Medi-Cal status, location, participating facilities and available enrollment slots.
For a family trying to keep a parent out of a nursing home, it is an option worth investigating early rather than assuming assisted living must be entirely private-pay.
Yes. Medi-Cal can pay for certain long-term-care services in your own home instead of requiring you to live in a nursing facility.
California has several programs designed specifically to help older adults and people with disabilities remain safely at home.
In-Home Supportive Services (IHSS)
IHSS is probably the best-known program.
It can authorize paid help with services such as:
-
Bathing and dressing
-
Meal preparation
-
Housecleaning
-
Shopping
-
Transportation to medical appointments
-
Certain paramedical services
-
Protective supervision in appropriate cases
You must generally have Medi-Cal, live in your own home in Porter Ranch, and need assistance to remain there safely.
A county social worker evaluates the person's needs and determines which services and how many hours will be authorized.
A family member can often become the paid IHSS caregiver.
Home and Community-Based Services can provide more intensive care
For someone whose needs are substantial enough that nursing-home placement might otherwise be necessary, California also has Home and Community-Based Services programs.
The Home and Community-Based Alternatives (HCBA) Waiver, for example, serves people who are at risk of nursing-home or institutional placement and provides care management and other services in the person's home or community residence.
Depending on the person's needs, HCBS waiver services can include:
-
Care management
-
Home health aides
-
Private-duty nursing
-
Personal care
-
Respite care
-
Family or caregiver training
-
Medical equipment and other support necessary to remain safely at home
These programs generally require the person to meet a nursing-facility or similar institutional level of care while being able to receive services safely in the community.
Older adults may have additional options
California's Multipurpose Senior Services Program (MSSP) provides home- and community-based services to qualifying Medi-Cal recipients who are age 60 or older and would otherwise be at risk of nursing-home placement.
The purpose is straightforward:
Help the person remain safely at home rather than enter a nursing facility.
Example
Mom is 82 and lives in her West Hills home.
She needs help bathing, preparing meals and taking medications, and she cannot safely be left alone for long periods. Her daughter assumes the only choices are paying thousands of dollars each month for private caregivers or placing Mom in a nursing home.
There may be another option.
Mom might qualify for IHSS to provide regular in-home assistance. If her medical needs are more intensive and she meets nursing-facility-level-of-care requirements, an HCBS waiver or another long-term-services program might provide additional support.
The goal may therefore become:
“How can we safely keep Mom at home?”
rather than:
“Which nursing home do we put Mom in?”
Medi-Cal does not automatically provide unlimited 24-hour home care
This is the important limitation.
Qualifying for Medi-Cal does not mean the State will simply pay whatever it costs to hire round-the-clock private caregivers.
Each program has its own eligibility requirements, covered services, authorized hours and availability. Some waiver programs can also have enrollment limits or waiting lists.
A person with extremely intensive needs may ultimately require a nursing facility even with substantial in-home assistance.
The takeaway
If someone wants to remain at home, do not assume nursing-home Medi-Cal is the only option.
Ask about IHSS, the HCBA Waiver, MSSP and other Home and Community-Based Services before concluding that institutional care is necessary.
For many California families, Medi-Cal planning is not only about protecting assets.
It can also be about finding a way to keep Mom or Dad safely at home for as long as possible.
An inheritance does not automatically terminate Medi-Cal, but what you inherit can affect your eligibility once you receive it.
For Medi-Cal programs subject to the asset test, California again counts assets beginning January 1, 2026.
That means an inheritance needs to be analyzed when it arrives rather than simply deposited into an account and ignored.
Cash inheritances
A lump-sum cash inheritance is generally treated as income in the month it is received.
If the money remains available afterward, it can then become a countable asset.
For example, suppose Mom is receiving long-term-care Medi-Cal and inherits $200,000 from her sister.
Depositing the $200,000 into Mom's checking account does not make it exempt. If she continues holding the money, she may exceed her Medi-Cal asset limit.
That does not necessarily mean she has permanently lost Medi-Cal.
It means the inheritance needs to be dealt with under the applicable Medi-Cal rules.
What you inherit matters
An inheritance is not automatically counted simply because someone called it an inheritance.
Medi-Cal looks at the property actually received.
Suppose instead Mom inherits a house.
If the inherited house becomes Mom's principal residence and satisfies Medi-Cal's home-exemption rules, its treatment may be very different from inheriting $500,000 in cash.
If Mom already owns her primary residence and inherits a second house, however, the second property may be a countable asset unless another exemption applies.
The same asset-by-asset analysis we have been discussing still applies.
You may be able to spend down the inheritance legitimately
If an inheritance places someone over the Medi-Cal asset limit, the answer is not necessarily to give the inheritance away.
The recipient may be able to use the money for legitimate expenses such as:
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Medical or dental expenses
-
Paying debts
-
Home repairs or improvements
-
Mortgage obligations
-
A vehicle
-
Household or personal needs
-
Other legitimate expenditures for the recipient or, when applicable, a spouse
The objective is to determine how much of the inheritance is actually countable and then decide what should be done with any excess.
Be very careful about immediately giving the inheritance to the children
This becomes particularly important for someone receiving or expecting to receive long-term-care Medi-Cal.
Suppose Mom inherits $200,000 and immediately gives the entire amount to her children because she is afraid of losing Medi-Cal.
California may treat that as a transfer of a non-exempt asset for less than fair market value.
If the transfer falls within the applicable long-term-care look-back period, it can create a period during which Medi-Cal will not pay for nursing-facility-level care.
In other words:
Receiving the inheritance may create an asset problem. Giving it away carelessly may create a transfer problem.
Neither problem should be addressed reflexively.
Example
Dad is already receiving Medi-Cal in a nursing facility when his brother dies and leaves him $150,000.
Dad's daughter sees the inheritance coming and assumes she has two choices:
-
Let Dad receive the money and lose Medi-Cal; or
-
Immediately give the money to Dad's children.
There may be better options.
Before the inheritance is distributed, the family can determine what Dad will actually receive, what his current countable assets are, whether he has legitimate expenses or exempt assets that need funding, whether spousal protections apply, and whether any transfer would create a Medi-Cal penalty.
And if the person leaving the inheritance is still alive and competent, there may sometimes be an opportunity to change that person's estate plan so the inheritance is structured appropriately before it ever reaches the Medi-Cal recipient.
That is very different from trying to repair the situation after an unrestricted inheritance has already been distributed.
Special-needs planning can matter
If a beneficiary is receiving means-tested public benefits, the person leaving the inheritance may sometimes use an appropriately drafted third-party special needs trust rather than leaving the inheritance directly to the beneficiary.
The beneficiary does not create or fund that trust with his or her own inheritance after receiving it. The planning is generally done by the person making the gift or leaving the inheritance.
That distinction can be extremely important.
The takeaway
If you receive an inheritance while on Medi-Cal, do not assume either:
“I automatically lose Medi-Cal.”
or:
“I'll just give the inheritance away.”
First determine what was inherited, whether it is countable or exempt, how it affects the applicable asset limit, and whether long-term-care transfer rules apply.
And if you know a substantial inheritance is coming, the best time to analyze it is before the money or property is distributed.
Yes. A properly drafted Special Needs Trust can allow a person with a disability to benefit from trust assets without necessarily losing Medi-Cal eligibility.
But there are two very different kinds of Special Needs Trusts, and the distinction matters.
Third-Party Special Needs Trust
A third-party Special Needs Trust is funded with money belonging to someone other than the beneficiary.
This is commonly used when a parent, grandparent, sibling or other relative wants to leave an inheritance to someone receiving Medi-Cal or other means-tested benefits.
Instead of leaving the inheritance directly to the beneficiary, the inheritance goes into the Special Needs Trust.
The trustee can then use the trust assets for the beneficiary while preserving eligibility for public benefits, provided the trust and distributions are handled properly.
Even better, because the beneficiary never owned the assets, California DHCS states that a properly structured third-party Special Needs Trust is not subject to Medi-Cal recovery when the beneficiary dies.
Example
Grandma wants to leave $300,000 to her disabled grandson, who receives Medi-Cal.
If Grandma leaves the $300,000 directly to him, the inheritance may become his countable property and jeopardize his benefits.
Instead, Grandma's estate plan directs his inheritance into a third-party Special Needs Trust.
The trustee can then use the money for the grandson's supplemental needs without simply handing him $300,000 of countable assets.
And when the grandson later dies, the remaining trust property can pass according to Grandma's instructions rather than automatically being used to reimburse Medi-Cal.
That is one of the most useful applications of a Special Needs Trust.
First-Party Special Needs Trust
A first-party Special Needs Trust is different because it is funded with the beneficiary's own money.
This might arise when a person receiving Medi-Cal:
-
Receives a personal-injury settlement
-
Receives an inheritance outright
-
Owns assets that would otherwise interfere with benefits
-
Receives another substantial amount of money in his or her own name
Federal law creates an exception allowing qualifying assets to be placed into a Special Needs Trust without the trust principal automatically being treated as an available Medicaid resource.
For an individual Special Needs Trust under 42 U.S.C. § 1396p(d)(4)(A), the beneficiary must be disabled and under age 65 when the trust is established and funded.
There are also pooled Special Needs Trusts managed by nonprofit organizations. California DHCS states that a pooled trust can be established for a disabled person of any age, although transfers into these trusts after age 65 can raise separate transfer-of-asset issues.
The tradeoff: Medi-Cal payback
A first-party Special Needs Trust comes with an important price.
When the beneficiary dies or the trust terminates, the trust generally must reimburse the State from the remaining trust assets, up to the amount of Medi-Cal benefits paid on the beneficiary's behalf.
That is why, whenever possible, it is usually much better for a parent or other relative to create a third-party Special Needs Trust before leaving assets directly to the beneficiary.
Once the beneficiary receives the inheritance personally, the planning problem becomes more complicated.
The trustee still has to be careful about distributions
Putting money into a Special Needs Trust does not mean the trustee can distribute it however he or she wants without affecting benefits.
Cash paid directly to the beneficiary can count as income.
Certain payments for food or housing can also affect means-tested benefits depending on the program and circumstances.
Payments made directly by the trustee for other goods and services — such as education, transportation, recreation, caregivers, computers, household assistance and other supplemental needs — can often be handled much more favorably.
The trustee therefore needs to understand not only the trust document but also the particular benefits the beneficiary receives.
The takeaway
A Special Needs Trust does not create more Medi-Cal benefits.
It creates a legal structure that can allow assets to be used for a disabled beneficiary without simply putting those assets into the beneficiary's hands and jeopardizing eligibility.
And the most important planning distinction is often this:
If someone else is leaving money to a Medi-Cal beneficiary, plan before the inheritance is distributed.
A properly drafted third-party Special Needs Trust is usually much cleaner than trying to fix a direct inheritance after the beneficiary has already received it.
They are two completely different questions.
Medi-Cal eligibility asks whether you qualify for benefits while you are alive.
For long-term-care Medi-Cal, the county looks at things such as:
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Your medical need
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Your income
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Your countable assets
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Whether certain assets are exempt
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Whether recent transfers affect eligibility
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Whether spousal protections apply
Beginning January 1, 2026, California again counts assets for many older, disabled and long-term-care Medi-Cal applicants. A qualifying primary residence, one vehicle, household belongings and certain retirement assets may be excluded, while cash, bank accounts, investments and additional real estate may count.
Estate recovery asks whether California can seek repayment after you die.
That is a separate analysis.
For Medi-Cal recipients who die on or after January 1, 2017, California generally limits estate recovery to:
-
Certain long-term-care-related Medi-Cal benefits; and
-
Property that is part of the deceased recipient's probate estate
California Welfare & Institutions Code § 14009.5 expressly defines the recoverable “estate” as property in the individual's probate estate.
That means an asset can be completely acceptable for Medi-Cal eligibility while you are alive but still create an estate-recovery problem after death if it ends up in probate.
The reverse can also happen.
An asset might count when determining eligibility while you are alive but later pass outside probate and therefore generally fall outside California's current estate-recovery rules.
Example
Suppose Mom owns a $950,000 West Hills home and qualifies for long-term-care Medi-Cal.
The house may be exempt for eligibility purposes, so Medi-Cal does not require Mom to sell it simply because she needs nursing-home care.
Now suppose Mom dies.
If the house is still titled solely in Mom's individual name and must pass through probate, it may become part of the estate against which DHCS can assert a recovery claim.
But if the house was properly transferred into Mom's living trust and passes outside probate, the estate-recovery result may be very different.
Same house.
Two completely different Medi-Cal questions.
This is why “Is my house protected from Medi-Cal?” is not really one question.
You have to ask:
1. Is the house exempt while I am alive?
and
2. How will the house pass when I die?
Good Medi-Cal planning considers both.
No. You do not need a lawyer simply to apply for Medi-Cal.
If the situation is straightforward, you can apply yourself through BenefitsCal or your county Medi-Cal office. A family member, nursing home, or benefits counselor may also be able to help gather documents and complete the application.
The point at which a lawyer becomes useful is usually not filling out the application.
It is deciding what to do with the assets before the application is filed.
When you may be able to handle it yourself
A relatively simple case might involve someone who:
-
Has assets comfortably below the Medi-Cal limit
-
Owns only an exempt home and ordinary personal property
-
Has made no recent substantial gifts or transfers
-
Has no complicated trust
-
Has no rental or business property
-
Has no spouse whose assets or income need protection
-
Has capacity and can manage his or her own affairs
In that situation, hiring an attorney merely to type information into a Medi-Cal application may not provide much value.
California allows people to apply directly through their county or BenefitsCal.
When legal advice starts becoming valuable
Consider getting legal advice before acting if the situation involves:
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Assets above the eligibility limit
-
A spouse remaining at home
-
A house that may be sold or transferred
-
Rental or investment real estate
-
Large retirement accounts
-
Gifts made during the Medi-Cal look-back period
-
An inheritance
-
A living trust that was never properly funded
-
An irrevocable or asset-protection trust
-
A Special Needs Trust
-
A parent with dementia or questionable capacity
-
Someone acting under a power of attorney
-
Questions about Medi-Cal estate recovery
Those situations involve more than eligibility paperwork.
They can involve property law, trust law, tax consequences, fiduciary duties, transfer penalties and estate planning at the same time.
Example
Dad enters a nursing home with a West Hills residence, $250,000 in investments and a daughter holding his durable power of attorney.
The daughter could certainly fill out the Medi-Cal application herself.
The harder questions are:
Should she spend some of Dad's investments?
Can she transfer anything?
Does Dad's home need to be moved?
Does the power of attorney authorize gifts or trust changes?
Would a transfer create a Medi-Cal penalty?
Would it create a capital-gains or property-tax problem?
Those are legal-planning questions, not application questions.
California Probate Code § 4264, for example, provides that an agent under a power of attorney cannot make gifts, modify a trust, change beneficiaries or perform several other major estate-planning acts unless the power of attorney expressly grants that authority.
A perfectly completed Medi-Cal application does not fix an unauthorized transfer.
Be careful with “Medi-Cal planners” who are not lawyers
There are legitimate nonlawyers who can help families understand benefits, gather documents and navigate an application.
But application assistance is different from individualized legal advice about transferring property, modifying trusts, changing an estate plan or interpreting legal rights.
The State Bar of California states that only licensed attorneys may provide legal advice in California.
That does not mean every Medi-Cal applicant needs an attorney.
It means you should understand what service you are actually buying.
The lawyer should save or protect more than the legal fee
For me, that is the practical test.
If someone has $40,000 in the bank, no house, no spouse and no complicated estate plan, paying thousands of dollars for elaborate Medi-Cal planning may make little economic sense.
But if a family is deciding what to do with a $1 million house, $400,000 of investments, a rental property or a spouse's retirement security, getting the strategy wrong can cost far more than getting advice before acting.
The takeaway
You can apply for Medi-Cal yourself.
But when qualifying requires decisions about what to keep, what to spend, what to transfer, what not to transfer, or how an existing trust or power of attorney affects those decisions, the problem has moved beyond filling out a government form.
That is usually the point where legal advice becomes valuable.
The application is paperwork. The planning is deciding what the paperwork should say after you have made the right legal and financial decisions.
Generally, no — California does not place a lien on your home during your lifetime merely because Medi-Cal is correctly paying for your care.
And there is an important new 2026 development.
California stopped using pre-death Medi-Cal nursing-home liens
Effective January 1, 2026, California formally opted out of the federal program that allowed states to place so-called TEFRA liens on the homes of certain permanently institutionalized Medi-Cal recipients.
The Centers for Medicare & Medicaid Services approved California's change on January 20, 2026.
So if you enter a nursing home and Medi-Cal pays for your care, California does not now place a lien on your house simply because you are receiving those benefits.
This is different from Medi-Cal estate recovery
Estate recovery generally happens after death.
For Medi-Cal recipients who die on or after January 1, 2017, California generally limits recovery to certain long-term-care-related benefits and property that is part of the deceased recipient's probate estate.
So these are two different questions:
While you are alive: California generally does not put a lien on your home merely because you are receiving correctly paid Medi-Cal benefits.
After you die: DHCS may have an estate recovery claim if there are recoverable benefits and assets subject to probate.
Example
Dad owns his $950,000 home in Canoga Park and later enters a nursing facility.
He qualifies for long-term-care Medi-Cal and continues to own the house.
Dad should not assume:
“Medi-Cal is paying for the nursing home, so the State is putting a lien on my house every month.”
That is not California's current rule.
The more important planning question is what happens to the house when Dad dies.
If the house remains outside his living trust and ends up in probate, Medi-Cal estate recovery may become an issue.
If the house was properly transferred into the living trust and passes outside probate, the analysis may be very different.
What about older information saying Medi-Cal can lien the house?
You may still find California regulations, old brochures, articles and attorney websites describing pre-death liens against the homes of permanently institutionalized Medi-Cal recipients.
That information can now be misleading.
California's Medicaid State Plan was specifically amended effective January 1, 2026 to opt out of imposing those pre-death TEFRA liens.
There are narrow exceptions
Federal law still permits a lien before death when benefits were incorrectly paid, generally following a court judgment establishing the improper payment. California's current Medicaid State Plan retains that authority.
That is very different from a lien merely because an eligible person properly received Medi-Cal.
There are also separate Medi-Cal lien rules involving money recovered from a personal-injury claim or lawsuit when Medi-Cal paid medical expenses caused by a third party. Those are not the ordinary nursing-home/home-ownership situation discussed here.
The takeaway
For correctly paid Medi-Cal benefits, the ordinary homeowner's concern in California is generally not a lien being placed on the house while the Medi-Cal recipient is alive.
The bigger issue is what happens after death and whether the home will pass through probate.
That is why keeping the home properly connected to the estate plan can matter even though Medi-Cal is not placing a lien on it during the owner's lifetime.
Usually, one vehicle does not count toward the Medi-Cal asset limit.
California currently treats your main vehicle as an exempt asset for Medi-Cal eligibility.
A second vehicle can be different
Additional vehicles may count toward the asset limit.
So if Dad owns:
-
One everyday car
-
A second SUV
-
A classic car
the first vehicle may be exempt, while the others may have to be included in the Medi-Cal asset calculation depending on the facts.
Example
Suppose Mom owns a $40,000 car and has $100,000 in savings.
She should not assume she has $140,000 of countable assets.
If the car is her exempt vehicle, her countable assets may be closer to the $100,000 in savings.
But if Mom also owns a second vehicle worth $25,000, that second vehicle may count.
The takeaway
For Medi-Cal purposes:
One vehicle is generally exempt. Additional vehicles may count.
So do not sell your only car just because you are trying to get under the Medi-Cal asset limit. First determine whether Medi-Cal was counting it in the first place.
Yes. Transfers between spouses are generally protected from the Medi-Cal transfer penalty.
Federal Medicaid law specifically provides that an individual is not made ineligible because assets are transferred to the individual's spouse or to another person for the sole benefit of the spouse.
California's current Medi-Cal guidance likewise tells applicants that assets can be transferred to a spouse without losing long-term-care coverage.
This is an important part of spousal impoverishment planning
When one spouse enters a nursing home and the other remains at home, Medi-Cal does not simply require the couple to divide everything in half and spend the rest.
Instead, California applies special spousal impoverishment rules.
At the initial eligibility determination, the couple's countable assets are examined under a combined allowance that includes the institutionalized spouse's permitted property plus the Community Spouse Resource Allowance (CSRA).
For 2026, the CSRA is $162,660.
Once eligibility is established, assets allocated to the community spouse may generally be transferred into that spouse's name without creating a Medi-Cal transfer penalty.
Example
Suppose Husband enters a nursing home while Wife continues living in their Canoga Park home.
They have:
-
Their exempt primary residence
-
$250,000 of countable savings and investments
They should not assume they must spend the $250,000 down to $130,000.
The spousal impoverishment rules may allow a substantial portion of those assets to be preserved for Wife.
If Husband is approved under those rules, property allocated to Wife can be transferred into her name without treating the transfer as a disqualifying gift.
That is exactly what the spousal protections are designed to accomplish.
There is a timing requirement
After an institutionalized spouse qualifies under the spousal impoverishment rules, California generally gives the couple a 90-day CSRA transfer period to move the appropriate assets into the community spouse's name.
Extensions may be available in appropriate circumstances.
This matters because assets left in the institutionalized spouse's name after the permitted transfer period can affect continuing eligibility.
So it is not enough to say:
“Transfers between spouses are exempt.”
The assets still need to be titled and allocated correctly.
Do not confuse a transfer to the spouse with a later gift by the spouse
This is another important distinction.
Husband transferring protected assets to Wife may be permissible.
But if Wife immediately turns around and gives those assets to the children, Medi-Cal can separately examine transfers made by the spouse during the applicable long-term-care look-back period.
So this is not necessarily a loophole:
Dad → Mom → Children
The transfer to Mom and the later transfer to the children are separate transactions and may receive very different treatment.
The home is especially straightforward
Federal Medicaid law expressly protects a transfer of the home to the applicant's spouse.
But in many cases, transferring the home solely for Medi-Cal eligibility may not even be necessary because a qualifying principal residence is already exempt while the spouse remains there.
There may still be estate-planning, title, incapacity or other reasons to change ownership, but the family should understand why it is making the transfer before recording a new deed.
The takeaway
Transfers to a spouse are one of the strongest protections built into the long-term-care Medi-Cal rules.
But the goal is not simply to move everything into the healthy spouse's name.
The better approach is to determine:
-
What property is already exempt
-
How much countable property the couple may retain
-
What should be allocated to the community spouse
-
What must be transferred during the CSRA transfer period
-
And whether either spouse plans to make additional transfers afterward
When one spouse needs nursing-home care, protecting the spouse who remains at home is not a loophole. It is an express part of the Medi-Cal rules.
Yes. You can keep money in checking and savings accounts and still qualify for Medi-Cal — as long as your total countable assets stay within the applicable limit.
Beginning January 1, 2026, California again counts cash and bank accounts for many people who are age 65 or older, disabled, or receiving long-term-care Medi-Cal.
Through June 30, 2027, the general asset limit is:
-
$130,000 for one person
-
$195,000 for two qualifying household members
-
Plus $65,000 for each additional qualifying household member
Married couples may be able to protect substantially more under the spousal impoverishment rules.
Example
Suppose Mom owns her primary residence, one car and has $90,000 in savings.
Her home and main vehicle may be exempt, while the $90,000 bank account counts.
She does not need to empty her bank account merely to qualify for Medi-Cal.
But if she has $180,000 in savings, she may need to reduce her countable assets before qualifying.
The takeaway
Medi-Cal does not require you to have no money.
It requires you to stay within the applicable limit for countable assets.
So the right question is not:
“Do I have money in the bank?”
It is:
“How much of everything I own does Medi-Cal actually count?”
Yes — but life insurance, annuities and burial funds are treated very differently under Medi-Cal.
The important question is usually not simply whether you own the asset.
It is whether you can currently turn it into cash, how much cash value it has, and whether Medi-Cal provides a specific exemption.
Life insurance
Life insurance with no cash surrender value generally does not create a countable asset problem.
For policies that do have cash value, California applies a special rule.
If the combined face value of the life insurance policies on an insured person is $1,500 or less, the policies are generally exempt.
If the combined face value exceeds $1,500, Medi-Cal generally counts the net cash surrender value of the policies rather than the death benefit.
That distinction matters.
Suppose Dad owns a $250,000 whole-life policy with a $40,000 cash surrender value.
Medi-Cal does not count the $250,000 death benefit as Dad's current asset.
But because the policy exceeds the applicable face-value exemption, the $40,000 Dad could actually access during his lifetime may be countable.
California's regulation expressly uses the policy's cash surrender value for this purpose.
Annuities require a closer look
An annuity is not automatically exempt simply because it is called an annuity.
Medi-Cal looks at things such as:
-
Whether payments have begun
-
Whether the owner can surrender the contract for cash
-
How long payments will continue
-
Whether the payment schedule complies with Medi-Cal rules
-
Whether purchasing or modifying the annuity created a transfer-of-assets problem
California specifically restored its annuity rules when the Medi-Cal asset test returned on January 1, 2026.
A properly annuitized contract may have its remaining principal treated as unavailable while the payments received from the annuity are treated as income.
But if payments have been deferred and the owner can surrender the annuity, its available cash surrender value may be countable.
So this is another area where the label tells you very little.
“I have a $300,000 annuity” does not tell us whether Medi-Cal counts $300,000 of assets.
We need to read the contract.
Burial funds receive special treatment
California allows certain money specifically set aside for burial, cremation or funeral expenses to be excluded.
For a revocable designated burial fund, the first $1,500 per individual can generally be exempt if the money or property is separately identifiable and clearly designated for burial expenses.
Qualifying irrevocable burial arrangements can receive different treatment.
California's regulations recognize designated burial funds in forms including:
-
Burial trusts
-
Prepaid funeral contracts
-
Burial insurance
-
Certain annuities
-
Other separately identifiable property clearly designated for burial expenses
Interest or appreciation on qualifying exempt burial funds can also remain exempt when it stays in the fund.
Burial plots are also generally exempt
A burial plot, vault or crypt retained for use by the applicant or certain family members is generally exempt under California's Medi-Cal regulations.
So someone does not ordinarily have to sell a cemetery plot purchased for his or her own future burial merely to meet the Medi-Cal asset limit.
Example
Suppose Mom has:
-
$100,000 in savings
-
A $100,000 whole-life policy with $25,000 of cash surrender value
-
A $200,000 annuity
-
A prepaid burial arrangement
Simply adding those numbers together and saying Mom owns $425,000 of countable assets would be wrong.
The savings may count.
The life-insurance analysis focuses primarily on its cash surrender value, not its $100,000 death benefit.
The annuity has to be examined to determine whether the principal remains available and how its payments are structured.
And some or all of the properly structured burial arrangement may be exempt.
The correct Medi-Cal number may therefore be very different from Mom's apparent financial net worth.
Do not cash out insurance or annuities automatically
This is the practical danger.
Someone hears that the Medi-Cal asset limit is $130,000 and immediately cashes out a life-insurance policy or annuity.
That can turn an asset receiving special Medi-Cal treatment into ordinary cash sitting in a bank account.
It can also trigger:
-
Income-tax consequences
-
Surrender charges
-
Loss of death benefits
-
Loss of guaranteed income
-
Transfer-of-asset issues
-
Other financial consequences that cannot easily be reversed
The same principle we have used throughout Medi-Cal planning applies here:
Classify the asset before changing the asset.
The takeaway
Life insurance, annuities and burial arrangements are not automatically countable or automatically exempt.
For Medi-Cal purposes, you need to look at the actual contract and determine:
-
Is there accessible cash value?
-
Is the policy within a specific exemption?
-
Has an annuity been properly put into payout status?
-
Are annuity payments countable income?
-
Is a burial arrangement revocable or irrevocable?
-
Is the property actually designated for burial expenses?
Two financial products with the same dollar value can receive completely different Medi-Cal treatment.
Read the contract before surrendering, transferring or restructuring it.