California is quietly bringing back asset limits for Medi-Cal long-term care coverage in 2026, and current recipients could be in for a devastating surprise. Here’s what’s happening: California eliminated asset limits for elderly and disabled Medi-Cal recipients in 2024, but those limits are returning in 2026. If you currently receive long-term care Medi-Cal benefits, when you submit your annual eligibility report next year, you could lose your coverage if your assets exceed the new limits.
In this critical episode, estate planning attorney Kirsten Howe explains the $130,000 asset limit returning for single individuals, why 2025 is your last opportunity to transfer assets without penalties, and the difference between regular Medi-Cal and long-term care Medi-Cal coverage. She also covers exactly which assets will count against you, which are exempt, and essential planning strategies to protect your benefits before the deadline.
Time-stamped Show Notes:
0:00 Introduction
0:02 Federal vs. state changes: distinguishing between well-publicized federal Medicaid cuts and California’s hidden asset limit reversal
1:56 MAGI Medi-Cal breakdown – how Obamacare’s expanded coverage works for healthy, low-income individuals
2:17 The crucial distinction: long-term care Medi-Cal covers far more than basic health insurance, serving elderly and disabled populations
3:16 Planning becomes essential again – why future Medi-Cal eligibility will require strategic asset management
3:35 Listen in as Kirsten explains more about exempt assets that may include a house, car, prepaid funeral, burial plot, small life insurance, and retirement accounts
4:27 Currently, 2025 offers no asset limits, exempt status for all assets, and penalty-free transfers
4:55 Next, Kirsten talks about the annual report trap that could devastate current recipients in 2026
5:36 Qualified yesterday, disqualified tomorrow: how current beneficiaries risk losing coverage despite meeting past requirements
Transcript:
Hello and welcome to Absolute Trust Talk. I’m Kirsten Howe, and I’m here alone today because I have something that I want to talk about that I think is very, very important and has not been getting much coverage in mainstream media. So you know, the podcasters have to pick up the slack, and what I’m talking about is some upcoming changes to Medi-Cal. I think this is really important for people who are thinking they may, in the future, need Medi-Cal, and particularly for people who are currently receiving Medi-Cal benefits.
You all are most likely at least vaguely familiar with the big, beautiful bill that was passed this past summer by our Congress and signed into law by our president. It did a lot of things. One of the things it did was it called for reduced funding by the federal government to the Medicaid programs in all the states. In California, we call our Medicaid program Medi-Cal. So Congress has determined that they’re going to start reducing federal funding to Medi-Cal. That’s going to happen. That’s going to play out over the next few years. We’ll see how it goes. People are going to lose their Medi-Cal coverage. There’s just no other way around it. That’s not what I’m here to talk to you about, though—that was very well publicized.
What I am here to talk to you about is a change that the state of California is making to its Medi-Cal laws. This doesn’t apply in other states. This is just California. And what’s happening is we are going back to having an asset limitation for Medi-Cal eligibility. Now, I’m not talking about people who qualify for Medi-Cal to pay for health insurance, to pay for doctor’s visits, hospitalizations—what we call MAGI Medi-Cal. It’s based on your Modified Adjusted Gross Income. That’s MAGI. That’s the expanded Medi-Cal coverage that we got as a result of Obamacare, and that’s for healthy people who just have low income and they need help getting insurance coverage.
This asset limitation that I’m talking about doesn’t apply to that type of Medi-Cal. That type of Medi-Cal never had an asset limit. It was only based on income. What I’m talking about is the Medi-Cal that generally is used by the elderly and by the disabled. It’s Medi-Cal coverage that includes long-term care coverage, not just health insurance coverage—it includes long-term care. So people who apply for that type of Medi-Cal historically have always had to pass both an income test and an asset test. However, in 2024 in California, we got rid of the asset test. So for the last two years, only income was relevant in determining your eligibility for that long-term care type of Medi-Cal, the elderly/disabled Medi-Cal.
The asset limits are coming back. So we’re going to have the same asset limits that we had pre-2024. The last couple of years, we haven’t had any asset limit, so people need to know that that deadline is coming up. Becoming eligible for Medi-Cal will just require more planning, more strategizing. If you have too many assets, you’ve got to get your assets below the level so that all your assets are exempt.
And I’m just going to quickly go through what that is for a single person. It’s going to be a house, a car. You can have a prepaid funeral plan. You can have a burial plot. You can have a tiny little life insurance policy. You can have your IRAs, 401(k)s, and $130,000 of other assets. That’s the pre-2024 limit, and that’s what we’re going back to—the pre-2024 limit. It’s a little different for married couples, but you get the idea. You can only have certain assets, and if you have anything more than that, you are not eligible.
Okay, so a couple of really important points: Right now, in 2025, we have no asset limit, so all assets are exempt. Assets can be transferred without penalty. You all know when you hear “Medi-Cal” and “transfers”—I know you’re out there thinking, possibly out loud, “What about look-back periods? What about transfer penalties?” Yes, those are coming back too. Right now, all assets are exempt. We don’t get penalized for transferring exempt assets. So that’s an important point to take away from this.
The other important point—and this is really important, and this is why I’m doing this here today, because I don’t think enough people realize this—when in 2026, if you are currently receiving this type of Medi-Cal, in 2026 you have to submit your annual report establishing your eligibility again. Every year when you’re on Medi-Cal, you have to submit a report to the Department of Health Care Services that explains, “Yes, I am still eligible. Here’s my income, here’s my assets.”
Next year, when you submit your report, if you have excess assets, you may lose your coverage. So you may have qualified during this period when there was no asset limit, but we’re going back to having an asset limit, and you’re going to have to disclose your assets again. You may lose your coverage.
So if you are listening to this and it doesn’t make sense to you, it doesn’t apply to you—”I’m not on Medi-Cal, I really don’t care”—but you know someone who might need to know this information, please, please pass it on. The point of this is to publicize this upcoming issue that could be just devastating for people.
Thank you so much for your attention, for your time, for listening. I love my audience. Share this with anybody you think might benefit, and I really look forward to connecting with you next time.
Resources Related to This Episode:
- Medi-Cal Asset Limits Return: What You Need to Know https://absolutetrustcounsel.com/medi-cal-asset-limits-return-what-you-need-to-know/
- KRON4 Interview with Kirsten Howe: Medi-Cal Cuts Threaten Vital Senior Care https://absolutetrustcounsel.com/kron4-interview-with-kirsten-howe-medi-cal-cuts-threaten-vital-senior-care/
- A Will is Not Enough – Securing Your Legacy with Estate Planning Life can change in an instant. A will is not enough to be prepared. Get free access to our actionable E-book Guidebook #1 and start protecting your legacy today. https://absolutetrustcounsel.com/guidebooks/
- Learn how to comfortably define gray areas and assess your unique needs to build a secure future now effortlessly. Check out Guidebook #2, Estate Planning Beyond the Basics, here > https://absolutetrustcounsel.com/guidebooks/
- Get our free introductory guide to the most used estate planning tool, family trusts, and understand how we plan to help protect your family. Guidebook #3: https://absolutetrustcounsel.com/guidebooks/
- Absolute Trust Counsel would love to offer access to our Incapacity Planning resource page: https://AbsoluteTrustCounsel.com/Incapacity-Planning/. We’ve collected our top planning information all in one place so listeners can find videos, guidebooks, blog posts, and a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
- We’re pleased to provide a library of e-books to address common estate planning questions and concerns in practical, easy-to-understand language. https://AbsoluteTrustCounsel.com/Resources/.
- ASK KIRSTEN: If you’d like Kirsten to answer your question on the air, please email her at Info@AbsoluteTrustCounsel.com.
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