The clock is ticking for California seniors and their families. Starting January 1, 2026, Medi-Cal will reinstate strict asset limits for long-term care eligibility — a major change that could expose homes and savings to estate recovery after death.
If you or a loved one are currently receiving or planning to apply for Medi-Cal benefits, now is the time to take action to protect your home, savings, and legacy before these rules take effect.
What Is Medi-Cal Estate Recovery?
When a Medi-Cal recipient passes away, the state can attempt to recover the cost of benefits paid on their behalf — a process known as estate recovery.
In California, since June 30, 2016, recovery is limited only to assets that pass through probate. This means if you structure your estate so that your assets avoid probate, you can often prevent Medi-Cal from reclaiming those costs.
“Medi-Cal may only recover from assets subject to probate for services received after June 30, 2016.”
— California Department of Health Care Services (DHCS)
(Source: DHCS – Estate Recovery Program)
🏠 How to Protect Your Home from Medi-Cal Recovery
1. Revocable Living Trust
Placing your home in a revocable living trust allows it to bypass probate entirely. This is one of the most effective and widely used estate planning tools in California for protecting a family home from Medi-Cal recovery.
2. Joint Ownership
Owning property as joint tenants with right of survivorship ensures the surviving co-owner (spouse or adult child) automatically inherits the home — outside of probate.
3. Life Estate Deed
A life estate deed allows you to live in your home for life while transferring ownership to a chosen beneficiary upon death. The property then skips probate.
4. Transfer to an Exempt Individual
California cannot seek recovery if a surviving spouse, minor child, or disabled child lives in the home. Transferring ownership to a “community spouse” is a common, lawful protection strategy.
5. Caregiver Child Exemption
If an adult child lived in the home for at least two years before you entered a nursing home and provided care that delayed institutionalization, you may legally transfer the home to them without triggering a penalty.
💰 How to Protect Your Savings and Financial Accounts
Revocable Living Trust
As with your home, placing financial accounts in a revocable living trust helps them bypass probate and avoid estate recovery.
Beneficiary Designations
For life insurance, IRAs, and 401(k)s, naming direct beneficiaries ensures assets pass outside of probate.
Spend-Down Strategies
You can legally “spend down” excess savings on eligible expenses such as:
- Paying off your mortgage or debts
- Home repairs and accessibility upgrades
- Prepaid funeral and burial plans
Long-Term Care Partnership Program
Owning a California Partnership long-term care insurance policy allows you to protect a matching amount of assets from both eligibility limits and recovery — dollar-for-dollar.
🕓 Why the 2026 Medi-Cal Asset Limit Rule Change Matters
On January 1, 2026, Medi-Cal will reinstate the asset test for non-MAGI recipients:
- $130,000 for individuals
- $195,000 for couples
- + $65,000 for each additional household member (up to 10)
After this date, any asset transfers may be subject to a three-year look-back period, which can disqualify or delay eligibility for long-term care benefits.
(Source: California Advocates for Nursing Home Reform (CANHR))
That means the best time to protect your estate is now — before December 31, 2025.
👩⚖️ Consult an Elder Law Attorney Before It’s Too Late
Medi-Cal planning is highly technical and mistakes can lead to penalties or denied coverage.
Our experienced attorneys at Elder Law Services of California help families:
- Protect their homes and savings from recovery
- Establish compliant trusts and transfers
- Navigate the 2026 Medi-Cal asset limit rule changes
- Secure eligibility for long-term care coverage
📞 Call (800) 403-6078 or Schedule your free consultation before the Dec. 31, 2025 deadline to safeguard what you’ve worked hard to build.
🧠 Frequently Asked Questions (FAQs)
Q: What is Medi-Cal estate recovery?
A: It’s the state’s right to recover the cost of Medi-Cal benefits paid after your death, typically from your probate estate.
Q: Can Medi-Cal take my home?
A: Only if it remains part of your probate estate. Using a revocable living trust, joint ownership, or a life estate can protect your home.
Q: Do the new 2026 Medi-Cal rules affect estate recovery?
A: Indirectly, yes. The reinstated asset limits make it more difficult to qualify for Medi-Cal without advance planning, which could lead to larger estates subject to recovery later.
Q: When should I set up a trust or transfer assets?
A: Before December 31, 2025 is ideal, as transfers after January 1, 2026 could trigger the new look-back rules.
Q: What happens if I wait until after 2026?
A: You may face disqualification, delayed benefits, or potential recovery from your estate. Early planning provides flexibility and peace of mind.
✅ Take Action Now
Don’t leave your home or savings unprotected. With the 2026 Medi-Cal asset test returning, now is the time to plan.
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Call Elder Law Services of California today at
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