Medi-Cal Asset Limits Return: What You Need to Know

I don’t know about you, but when the State of California announced a few years back that it would remove assets as a factor in all Medi-Cal eligibility, I thought it was too good to be true. Turns out, it was true, but it was just too good to last for very long. Pursuant to the state’s 2026 budget announced this summer, the asset limits will be revived for people applying for or renewing their Medi-Cal eligibility after January 1, 2026. Here’s what you need to know:

1. Asset limits apply only to non-MAGI Medi-Cal. MAGI (Modified Adjusted Gross Income) Medi-Cal is the expanded Medicaid made available under the Affordable Care Act (Obama Care) to people who have low income. This type of Medi-Cal is health insurance only, it does not cover long-term care. This is similar to any private health insurance you may have. If you want long-term care coverage, you have to buy an additional policy just for that. MAGI Medi-Cal has only income limits. It has never had asset limits.Non-MAGI Medi-Cal is used generally by the elderly and disabled. This is the kind of Medi-Cal with which we at Absolute Trust Counsel help our clients. It does include coverage for long-term care and it has, except for the last two years, always had asset and income eligibility limits.
2. When the asset limits return, they will resemble the limits that were in place in 2023, just before the limits went away. To qualify for non-MAGI Medi-Cal, applicants must own only exempt assets to be eligible. The following will be exempt assets in 2026:

   1. SINGLE

      1. Home

      2. One vehicle

      3. Pre-paid funeral/burial/plot

      4. Whole-life insurance policy worth $1,500 or less

      5. IRA/401k as long as applicant is receiving periodic distributions

      6. $130,000 of other property

   2. MARRIED, BOTH SPOUSES APPLYING FOR MEDI-CAL

      1. Same as Single plus $65,000 of other property
   3.  MARRIED, ONLY ONE SPOUSE APPLYING FOR MEDI-CAL
      1. Same as Single plus $157,920 of other property (Community Spouse Resource Allowance)
      2. Community spouse’s IRA/401k regardless of distribution/pay-out status
3. Income limits will continue to apply.
4. You can do eligibility planning to eliminate excess assets. One of the most frequently used planning tools is transferring assets, either to an irrevocable trust or to family members. With the return of asset limits we will also have a return of look-back periods and transfer penalties. But remember, penalties are meant to discourage people from transferring assets in order to become eligible for Medi-Cal. Ownership of exempt assets does not affect eligibility so, logically, transferring exempt assets is not penalized. Right now, and until the end of 2025, all assets are exempt assets, so carefully planned transfers made now, before January 1, 2026, will not be subject to penalties.

If you are worried about paying for long-term care, this year is a good time to consider Medi-Cal planning. Give us a call – we are here to help.

[AD] Estate planning addresses many important factors about your future and legacy. Where do you get started if you don’t have an estate plan in place? If you do, how have new laws and life transitions changed? Will your plan still protect you? Regardless, you deserve to have control over your wants, needs, goals, and hopes for the future. We can help you understand your options and, legally, how you will best be protected at all touchpoints. Get started today by scheduling a free discovery call so we can discuss your needs. Visit https://absolutetrustcounsel.com/scheduling/ or call us at (925) 943-2740.