Estate Planning and the return of Medi-Cal Gifting Provisions

With the restoration of the Medi-Cal eligibility asset test on January 1, 2026 (back to where it existed in July 2022), some people may want to consider whether to include specific gifting provisions in their power of attorney and in their living trust for Medi-Cal eligibility purposes. Such provisions authorize the person’s trustee or agent under the power of attorney to gift assets subject to their control in order to allow the person’s remaining assets to be within the asset limits for Medi-Cal eligibility, as relevant to either the community based or the long term care Medi-Cal programs (excluding Medi-Cal under the Affordable Care Act).

On January 1, 2026, a single person can have up to $130,000 in available, countable non exempt assets. This threshold does not include exempt assets, such as, the home, the car, the retirement account. A married couple can have an additional $65,000 in non exempt assets and be eligible for Community Based Medi-Cal. With long term care Medi-Cal, the stay at home spouse can have almost $160,000 in his or her own countable assets in addition to the institutionalized spouse’s $130,000.

Achieving the foregoing results often requires gifting by the Medi-Cal applicant to his or her spouse or children. Such gifting may not be possible if the applicant does not have capacity to make gifts due, such as to dementia. People, therefore, may want to include gifting provisions inside of their estate planning documents (trust and power of attorney) so that such gifts can be made on their behalf when the time comes.

Gifting is more complicated when the person is seeking eligibility for long term Medi-Cal for residential care at a skilled nursing home. California still has a thirty (30) month look back period prior to applying for Medi-Cal. Any gifts of non exempt assets in such look back period carry a Medi-Cal ineligibility transfer penalty that is computed based on the size of the gift. Such ineligibility period commences as of the transfer date and may cause the applicant to not be eligible for long term care Medi-Cal.

Fortunately, such ineligibility transfer penalties can often be avoided with appropriate gifting techniques. Again, if the applicant does not have the capacity to make gifts then it is very important that the applicant’s estate planning include such gifting authorization.

Typically, the gifting is to the applicant’s spouse or else to their children. Also, the person with the authorization is typically also a beneficiary of such gifting. For such gifting to be valid it is important that the authorization waives the legal conflict of interest created by a person with representative authority making a gift of assets to themselves. Otherwise, such gifting could be determined to be criminally abusive as it violates the duty of self dealing that prohibits an agent or a trustee from gifting the person’s assets to themselves, at least during the person’s lifetime.

Otherwise, the person’s family may have to petition the court for a gift of assets to the well spouse. Gifting to children, without such legal authority, is more complicated as it involves a conservatorship and a substituted judgment petition to authorize the gift.

The foregoing is not legal advice. Anyone confronting the Medi-Cal issues discussed above should consult an 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.