Major Changes Coming to Medi-Cal: How New Asset Rules Will Affect Your Skilled Nursing Home Coverage
If you or a loved one relies on Medi-Cal to pay for skilled nursing home care, important changes are coming that could affect your eligibility. Starting January 1, 2026, California will bring back asset limits that could disqualify many people who currently receive coverage.
The History: How We Got Here
Before 2024: Strict Asset Limits
Before January 1, 2024, California had strict rules about how much money and property you could own and still qualify for Medi-Cal long-term care services. The limits were:
- $130,000 for a single person
- $195,000 for a married couple
These rules also included a 30-month "look-back period." This meant that if you gave away assets or sold them for less than market value during the 30 months before applying for Medi-Cal, you could be penalized with a period of ineligibility.
Many families had to spend down their life savings or engage in complex legal planning to qualify for coverage when they needed skilled nursing care.
2024-2026: The Brief Period of No Asset Limits
On January 1, 2024, California made a dramatic change. The state completely eliminated asset limits for most Medi-Cal programs, including long-term care coverage. This meant:
- Anyone could qualify for Medi-Cal skilled nursing coverage regardless of how much money or property they owned
- No penalties for transferring assets after January 1, 2024
- Thousands of people who previously couldn't qualify suddenly became eligible
This change was intended to help more people access care and reduce the burden of "spending down" assets. However, it also led to a significant increase in program costs.
What Changes After January 1, 2026
Asset Limits Return
Beginning January 1, 2026, California will reinstate asset limits for Medi-Cal long-term care eligibility. The limits will return to $130,000 for an individual and $195,000 for couples.
Who Will Be Affected
Current Medi-Cal beneficiaries will need to provide information about their assets either during their next annual renewal that occurs after January 1, 2026, or during a change in circumstance redetermination. This means:
- New applicants applying on or after January 1, 2026, will need to meet the asset limits
- Current recipients will be reassessed during their next eligibility review after January 1, 2026
- Existing beneficiaries who don't meet the new asset limit will be given a grace period of one month to "spend down" their assets without losing their eligibility
The Return of Transfer Penalties
While the details are still being finalized, California will begin to consider transfer penalties for individuals who transfer properties on or after January 1, 2026 for the purposes of becoming eligible for Long Term Care Medi-Cal. However, assets are completely exempt in 2025, and transfer of exempt property cannot be considered in determining a transfer penalty.
How This Affects Skilled Nursing Home Care
Many Will Lose Coverage
Many individuals who currently rely on Medi-Cal for nursing home care may be disqualified, have their benefits reduced, or face asset recovery after death. This is particularly concerning because:
- The state pays on average more than $114,000 per person each year for nursing home care
- Without full-time home care, many would end up in nursing homes, a more expensive option
- People may be forced to spend down their life savings to qualify again
What Assets Count
Previous Medi-Cal rules for "exempt" or "non-exempt" assets will remain the same as they were prior to 2024. Generally, this means:
Exempt Assets (don't count toward the limit):
- Your primary home (however proceeds from the sale of a home are counted)
- One vehicle
- Personal belongings and household items
- Certain funeral and burial accounts
Countable Assets (count toward the limit):
- Bank accounts and savings
- Proceeds from the sale of a home
- Stocks, bonds, and investments
- Second homes or investment property
- Retirement account balances (though withdrawals count as income)
The Impact on Families
Health advocates say the proposed Medi-Cal asset limit would keep people in poverty while California Gov. Newsom says it's essential to cut rising costs. The real-world impact includes:
- Families may need to spend down savings accumulated over a lifetime
- Some may lose their independence and be forced into institutional care
- This could lead to more homelessness of seniors and the disabled, which will cost the state money too
Why You Need Expert Legal Guidance Now
Time Is Running Out
There is a limited opportunity for individuals who act before December 31, 2025 to be "grandfathered" in under current Medi-Cal rules. With less than five months remaining, it's crucial to act quickly.
Complex Planning Required
The rules around Medi-Cal eligibility are complex, and mistakes can be costly. Professional legal guidance can help you:
- Understand whether you'll be affected by the new rules
- Explore legal strategies to protect your assets
- Navigate spousal impoverishment protections
- Plan for estate recovery concerns
- Ensure you don't inadvertently create transfer penalties
Protect Your Future
Establishing a Medi-Cal Asset Preservation Plan now may preserve eligibility and prevent asset loss. The strategies available today may not be available after January 1, 2026.
Take Action Today
If you or a loved one currently receives Medi-Cal for skilled nursing care, or if you anticipate needing this coverage in the future, don't wait. The window for protective planning is closing rapidly.
Contact OC Elder Law today for expert legal guidance. Our experienced attorneys understand the complexities of Medi-Cal planning and can help you navigate these changes to protect your assets and preserve your eligibility.
Don't let these rule changes catch you unprepared. The decisions you make in the coming months could impact your financial security and access to care for years to come.
