Transfer of Assets in 2025 Before Restored Medi-Cal Asset Test on January 1, 2026.

On January 1, 2026, California’s Medi-Cal program restores its prior asset test used to determine eligibility for Medi-Cal benefits, as the rule existed on July 1, 2022. This means reinstating the associated resource limits, and exemptions and asset counting rules. This applies to all Medi-Cal recipients except the Medi-Cal recipients enrolled under the Affordable Care Act which uses the applicant’s Modified Adjusted Gross Income (“MAGI Medi-Cal”) to determine eligibility.

Hence in 2026 Medi-Cal’s 30 month look back period and its associated asset transfer Medi-Cal eligibility penalties will resume relevance both to new Medi-Cal applications, to annual renewals and redeterminations of existing Medi-Cal beneficiaries. Meanwhile, 2025 is a quickly vanishing opportunity for anyone already on Medi-Cal, or expecting to need Medi-Cal, to act proactively by removing any excess assets that may otherwise disqualify them in 2026. That is, transfers made in 2025 do not count for eligibility purposes after January 1, 2026. Transfers made on and after January 1, 2026, however, may count.

Under the restored asset test, Medi-Cal goes back to July 1, 2022, when there was allowed a cash or asset reserve of $130,000 (in otherwise available and countable non-exempt assets) for an individual, and a reserve of $195,000 for a couple, if both receive Medi-Cal. An extra $65,000 for each additional dependent family member up to ten dependents is allowed (See Department of Health Care Services, www.dhcs.ca.gov and California Advocates for Nursing Home Reform, www.canhr.org). Dependent family member includes a person’s disabled and minor child at home. The foregoing limits when applied are subject to possible increase on a case by case basis due to a claim and showing of spousal impoverishment.

If the Medi-Cal recipient is in a skilled nursing facility, then that person has a $130,000 resource limit and the at home / community spouse, who does not receive Medi-Cal, is also allowed a so-called “Community Spouse Resource Allowance” (“CSRA”). The CSRA for 2026 has not yet been established but it is expected to be around $160,000. That means that the well spouse at home can have up to $160,000 in otherwise countable assets in addition to the institutionalized spouse having up to $130,000 in otherwise countable assets. Again, the CSRA can be enlarged based on spousal impoverishment of the well / stay at home spouse. Alternatively, the well spouse may be entitled to some or all of the institutionalized spouse’s income.

That said, now in 2025, a person with excess assets has a soon vanishing opportunity either to spend down to the 2026 asset limits and/or to gift those assets to a trusted relative or friend. The trusted relative or friend could in turn establish a special needs trust for the same person with such assets.

Besides the personal resource exemption, Medi-Cal beneficiaries still enjoy the longstanding exemptions for a person’s home, ordinary household contents, a car, a burial policy, and retirement plans (subject to rules). So long as a Medi-Cal recipient checks the box that they intend to return home (if they were ever to become well again), the home is an exempt asset for Medi-Cal eligibility.

The soon to be restored Medi-Cal Asset Test rejoins Medi-Cal’s continuing Share of Cost (i.e., income) and Estate recovery rules. That is, first, depending on the situation, a person’s income is often required to pay a share of cost for Community Based and Long Term Care Medi-Cal programs. Moreover, second, since 2017, Medi-Cal Estate recovery is infrequent – and avoidable — as it only applies when a deceased Medi-Cal recipient’s estate is subject to a probate, and then only if there is also no surviving spouse.

Taking any appropriate action now depends on a Medi-Cal recipient seeing a need to do so and acting quickly before January 1, 2026. An agent under a power of attorney might also have the necessary authority, but only if and to the extent that the power of attorney expressly allows for gifting of assets.

The foregoing brief discussion is not legal advice. Consult a qualified estate planning attorney for guidance. Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.