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Understanding Medi-Cal for Long-Term Care in California (January 2024 Update)

Blog Medi-Cal Planning: California – 2026 Update
Medi-Cal Planning 101: California 2026 Update | Elder Care Law California
Medi-Cal Planning · 2026 Update

Medi-Cal Planning 101:
California 2026 Update

Elder Care Law California • Updated March 2026 • 15 min read

Long-term care planning is one of the most stressful financial challenges a family can face. Whether you’re watching a parent’s health decline or trying to be proactive about your own future, the question of how to pay for care — and how to protect what you’ve spent a lifetime building — can feel overwhelming.

At Elder Care Law California, we believe that good planning starts not with forms or formulas, but with a conversation. Before we look at a single asset or run a single calculation, we want to understand your family’s short and long-term care plan goals. What are you actually trying to accomplish?

For many of our clients, the primary goal is keeping a parent out of a nursing home for as long as possible — whether that means staying at home with in-home support or transitioning to an assisted living community. For others, a parent has already reached the point where they need skilled nursing care, and the family’s focus has shifted to figuring out how to afford that care without losing the family home or depleting everything they’ve saved.

Once we have a clear picture of your goals, our Medi-Cal planning focuses on three interconnected pillars: Eligibility, Share of Cost Reduction, and Asset Protection. Here’s an overview of each.

Pillar One: Eligibility

Before Medi-Cal will pay for long-term care services — whether in a nursing home, assisted living, or at home — an applicant must meet both medical and financial eligibility requirements. On the financial side, everything starts with understanding assets.

Exempt vs. Non-Exempt Assets

Medi-Cal draws a fundamental distinction between exempt assets and non-exempt assets. Exempt assets are not counted toward the eligibility limit. Non-exempt assets are counted, and they are what we need to plan around. Exempt property includes the principal residence (which remains fully excluded even if the applicant is not currently living there, as long as they express an intent to return), one vehicle, and household belongings. Non-exempt assets generally include cash savings, investment accounts, additional real property, and most other financial holdings.

As of January 1, 2026, Medi-Cal reinstated an asset limit for non-MAGI programs — the programs that serve older adults and people with disabilities. That limit is $130,000 for an individual and $195,000 for a couple, plus $65,000 for each additional household member. Families who are asking how much can you have in assets and still qualify for Medi-Cal often don’t realize that with proper planning, the answer may be significantly more than those headline numbers suggest.

The goal of eligibility planning is to get a complete picture of everything the applicant — and their spouse — owns, and then develop a strategy to position those assets in a way that achieves eligibility while preserving as much as possible for the family. Here are the primary planning tools we use:

1 Exempt Asset Maximization

Before exploring more complex strategies, we always start by identifying what is already protected. Many families are surprised to discover how much they can shelter without any formal legal planning. The primary home, one vehicle, and certain retirement accounts are all exempt from Medi-Cal’s asset count. IRA and pension accounts held in the name of the community spouse are not counted, and the community spouse does not need to be receiving periodic distributions in order to exclude them. Understanding what you already have in the exempt column is the foundation of any good plan.

2 Spend-Down Strategies

When a client has non-exempt assets above the limit, one approach is a strategic spend-down — using those funds in ways that are permitted under Medi-Cal’s rules and that benefit the family. This can include paying off a mortgage, making home improvements, purchasing a vehicle, prepaying funeral and burial expenses, or paying for needed medical equipment and care. The key distinction from a random spend-down is intentionality — every dollar spent should be directed toward something that either creates lasting value or converts to an exempt asset.

3 Converting Non-Exempt Assets to Exempt Assets

In some cases, countable assets can be repositioned into exempt categories rather than simply spent. For example, using savings to pay down or pay off the balance on the primary residence converts a non-exempt liquid asset into an exempt one — the home equity. For families worried about how to protect the family home from Medi-Cal, this is one of the most important concepts to understand early in the planning process.

4 Spousal Protections — The Community Spouse Resource Allowance (CSRA)

For married couples, Medi-Cal’s Spousal Impoverishment rules are one of the most powerful tools available. When one spouse needs long-term care Medi-Cal, the law does not require the other spouse to spend down to almost nothing. Under Spousal Impoverishment protections, the person on Medi-Cal can have up to $130,000 in their name, while the spouse at home can keep up to the Community Spouse Resource Allowance (CSRA) — which in 2026 is $162,660 [verify current figure against DHCS].

This means a married couple can potentially protect a combined total of nearly $300,000 in countable assets while one spouse qualifies for Medi-Cal coverage. Medi-Cal planning for married couples is one of the most nuanced and high-value areas of elder law — and one of the areas where working with an experienced attorney makes the biggest difference.

5 Trust Instruments and Court Petitions

In more complex situations, formal legal tools may be appropriate. Irrevocable trusts and special needs trusts can play an important role in long-term eligibility planning, particularly when there are concerns about future asset accumulation or inheritance. Assets held in a revocable trust are counted toward the asset limit, so trust planning requires careful structuring to be effective. In certain circumstances — particularly involving married couples who need court authorization to reposition jointly held assets — a court petition may also be warranted.

⚠ A Note on the Look-Back Period: With the 2026 asset limit reinstatement came the return of transfer penalties. Medi-Cal will consider transfer penalties for individuals who transfer assets on or after January 1, 2026 for the purpose of becoming eligible for long-term care Medi-Cal. Transfers made during 2024 and 2025 will not be included in the look-back period. This makes early planning — before a crisis arises — more important than ever.

Pillar Two: Share of Cost Reduction

Qualifying for Medi-Cal isn’t always an all-or-nothing proposition. Many applicants who have income above Medi-Cal’s no-cost threshold can still qualify for coverage — but they will have a share of cost. This is the amount a beneficiary must contribute toward their own care costs each month before Medi-Cal begins paying for covered services.

For families navigating assisted living, share of cost planning takes on particular importance. To participate in the Assisted Living Waiver (ALW) program — Medi-Cal’s program for seniors who need nursing-facility-level care but wish to remain in a community setting — participants must be eligible for full-scope, no share-of-cost Medi-Cal benefits. This means that having a share of cost can actually be a barrier to accessing the ALW, making it critical to explore every available avenue for reducing or eliminating it.

For married couples, there are often significant planning opportunities under Spousal Impoverishment rules. If one spouse is considered “institutionalized” — either by living in a nursing home or by being enrolled in or on a waitlist for a participating Medi-Cal Home and Community Based Services program — the couple may be able to access higher monthly income allowances and reduced share of cost.

There are also specific deductions available to residents of assisted living facilities that can dramatically reduce or eliminate a share of cost. For a deeper dive:

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Related Article
Understanding Medi-Cal Share of Cost
A complete guide to how share of cost is calculated and strategies to reduce it.
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Medi-Cal Share of Cost Calculator
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Pillar Three: Asset Protection

Getting a loved one qualified for Medi-Cal is an important achievement — but it’s only part of the picture. Families are often surprised to learn that Medi-Cal can seek reimbursement for the costs it paid after the beneficiary passes away. This is known as the Medi-Cal Estate Recovery Program, and understanding it is essential to protecting your family’s legacy.

Here’s how it works: Repayment is limited to estate assets subject to probate that were owned by the deceased beneficiary at the time of death, and applies to payments made for nursing facility services, home and community-based services, and related hospital and prescription drug services. In other words, Medi-Cal’s recovery claim runs through the probate process — the legal procedure by which a deceased person’s assets are identified, valued, and distributed.

The good news: If property is not subject to probate in California, the state cannot recover it. California’s probate law excludes property held in living trusts, joint tenancies, life estates, and other types of probate-avoiding transactions.

This means that proactive estate planning — structuring assets so they pass to heirs outside of the probate estate — is one of the most powerful tools available for protecting what you’ve worked to build. At Elder Care Law California, asset protection planning looks at the full picture: how title is held on real property, how financial accounts are structured, whether beneficiary designations are in place, and whether trust instruments should be used to ensure a smooth, protected transfer to heirs.

It’s also important to know that DHCS does not have a claim until after the Medi-Cal client’s death — and the death of any surviving spouse. Nothing is owed during the client’s or surviving spouse’s lifetime. This gives families meaningful time and opportunity to plan — and underscores why the combination of Medi-Cal planning and estate planning, done together, produces the best outcomes for families.

Frequently Asked Questions

As of January 1, 2026, the asset limit for long-term care Medi-Cal is $130,000 for a single individual and $195,000 for a couple, plus $65,000 for each additional household member. These limits apply to non-exempt, countable assets. With proper planning, many families are able to protect significantly more than these figures suggest.
Exempt assets — those not counted toward the Medi-Cal limit — include the primary residence (as long as the applicant intends to return), one vehicle, household furnishings, and certain retirement accounts. The exemptions available to a married couple are broader than those available to a single applicant, which is why Medi-Cal planning for married couples often produces the most dramatic results.
The healthy spouse at home — called the “community spouse” — is protected by Spousal Impoverishment rules. In 2026, the community spouse can keep up to $162,660 in countable assets under the Community Spouse Resource Allowance (CSRA) [verify current figure against DHCS], in addition to exempt assets like the home and vehicle. The spouse receiving Medi-Cal can also retain up to $130,000 in their name, meaning a married couple may be able to protect a combined total approaching $300,000.
This is one of the most common concerns families bring to us. The good news is that the primary residence is exempt during the Medi-Cal recipient’s lifetime — Medi-Cal cannot force a sale of the home while the beneficiary or their spouse is alive. The key issue arises at death, when the state may seek recovery through the probate process. Proper estate planning — including the use of living trusts, beneficiary deeds, and joint tenancy — can ensure the home passes to heirs outside of probate and out of reach of the estate recovery program.
Medi-Cal can file a claim against the probate estate of a deceased beneficiary to recover costs paid for long-term care services. However, if the home is structured to pass outside of probate — through a living trust, joint tenancy, or other probate-avoiding tool — the state generally cannot recover against it. Planning ahead is the key to ensuring your home passes to your family, not the state.
Share of cost is the monthly amount a Medi-Cal beneficiary must contribute toward their care before Medi-Cal begins paying. It functions similarly to a deductible. It is calculated based on the applicant’s monthly income, minus certain allowable deductions. For married couples, spousal income rules and facility-based deductions can significantly reduce — or in some cases eliminate — the share of cost. Use our Share of Cost Calculator for a quick estimate.
With the reinstatement of asset limits in 2026 came the return of transfer penalties. Medi-Cal will evaluate transfers of assets made on or after January 1, 2026 within a 30-month look-back window prior to applying for nursing facility care. Importantly, transfers made during 2024 and 2025 are excluded from this look-back. This makes acting sooner rather than later an important part of any planning strategy.
The earlier the better. Early planning creates the most options — including the ability to use trust instruments, make strategic conversions, and take full advantage of spousal protections before a crisis forces rushed decisions. That said, even families who are already in crisis have options. An experienced elder law attorney can often find meaningful planning opportunities even when care has already begun.
An elder law attorney analyzes the full picture of a client’s assets, income, living situation, and care goals, then develops a customized legal strategy to achieve Medi-Cal eligibility while protecting as much as possible for the family. This can involve trust drafting, asset restructuring, spend-down planning, spousal allocation strategies, court petitions, and coordination with estate planning to prevent recovery. It is not a one-size-fits-all process — and the right strategy depends entirely on your family’s specific circumstances.

Ready to Take the Next Step?

Medi-Cal planning is not a one-size-fits-all process. The right strategy depends on your family’s specific goals, assets, income, and timeline. The earlier you begin, the more options you have.

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This blog post is intended for general informational purposes only and does not constitute legal advice. Laws and program rules change frequently. Please consult a qualified elder law attorney for advice specific to your situation.