Quick Answer: The average California nursing home costs about $12,000 to $15,000 per month—enough to drain a lifetime of savings in under three years. Medi-Cal can cover these costs, but strict eligibility rules mean you need to plan well in advance. With the asset test back as of January 1, 2026 and a look-back period being phased in to the full 30 months by July 1, 2028, asset protection strategies like irrevocable trusts must be implemented early. A comprehensive estate plan that includes Medi-Cal planning can protect your family home and savings while ensuring you qualify for the care you need.

Medi-Cal Planning and Asset Protection for Long-Term Care in California (2026 Guide)

The Long-Term Care Crisis Facing California Families

Here is the reality most California families are not prepared for: roughly 70% of Americans turning 65 today will need some form of long-term care during their remaining years, according to the U.S. Department of Health and Human Services (LongTermCare.gov). In California, where the cost of care is among the highest in the nation, failing to plan can mean losing your home, your savings, and your family's financial security in a matter of months.

Long-term care is not covered by Medicare in most situations. Medicare covers only short-term skilled nursing (up to 100 days) following a hospital stay—not the ongoing custodial care that most seniors eventually need. Private long-term care insurance is expensive and increasingly difficult to obtain. That leaves Medi-Cal as the primary safety net for millions of California families.

But Medi-Cal has strict eligibility rules. Without proper planning, families face an impossible choice: spend down virtually everything to qualify, or pay out of pocket until the money runs out.

Example: The Real Cost of Waiting

Consider a hypothetical 79-year-old homeowner diagnosed with vascular dementia. Her family assumes Medicare will cover nursing home care. When they learn it will not, they look at private pay:

• Skilled nursing facility, California median private room: $15,178/month (CareScout 2025)
• Her total savings and investments: $285,000
• Time until savings would be fully depleted: approximately 19 months
• Home equity: $850,000 (at risk of Medi-Cal estate recovery)

If her family had begun Medi-Cal planning three years earlier, they could have protected the home and a significant portion of her savings through an irrevocable trust and proper asset repositioning—saving the family over $500,000.

As a California estate planning attorney who helps families throughout California navigate Medi-Cal eligibility and long-term care planning, I see this scenario regularly. The families who plan ahead preserve their assets. The families who wait lose them. This guide explains exactly what you need to know about Medi-Cal planning in 2026.

Understanding Medi-Cal for Long-Term Care

What Medi-Cal Covers

Medi-Cal (California's Medicaid program) is a joint federal-state program that covers health care costs for low-income individuals, including long-term care. For seniors, Medi-Cal can cover:

• Skilled nursing facility (nursing home) care — The most common and expensive form of long-term care
• In-Home Supportive Services (IHSS) — Assistance with daily activities in your own home
• Community-Based Adult Services (CBAS) — Adult day health care programs
• Assisted living waiver programs — Limited coverage for assisted living facilities
• Home and Community-Based Services (HCBS) — Alternatives to institutional care

Types of Medi-Cal Relevant to Long-Term Care

Not all Medi-Cal programs have the same eligibility rules. Understanding the distinctions is critical:

Program	Asset Test?	Income Limit	Covers Nursing Home?
Aged & Disabled Medi-Cal	See note below	138 percent of the federal poverty level (updated each April)	Yes, with share of cost
Institutional Medi-Cal	Yes (look-back applies)	Income redirected to facility	Yes, fully
IHSS (In-Home Supportive Services)	Varies	Varies by program	No (home care only)
Medi-Cal with Share of Cost	See note below	Above free Medi-Cal limits	Yes, after share of cost met

Important note: California eliminated the Medi-Cal asset test on January 1, 2024, under AB 133 (2021), and reinstated it on January 1, 2026, under AB 116 (2025) (DHCS ACWDL 25-18). The asset limit and a phased-in look-back period now apply again to applicants seeking nursing facility level of care.

Medi-Cal Eligibility Rules for 2026

Income Limits

For most Medi-Cal programs, the income limit is 138 percent of the federal poverty level (updated each April).

For institutional Medi-Cal, income rules work differently. The Medi-Cal recipient's income (minus a small personal needs allowance of approximately $35/month) goes to the nursing facility as their "share of cost." The program effectively has no income ceiling for eligibility—instead, income is redirected to pay for care, with Medi-Cal covering the balance.

Asset Limits: Eliminated in 2024, Reinstated in 2026

California eliminated the Medi-Cal asset test on January 1, 2024, under AB 133 (2021), and reinstated it on January 1, 2026, under AB 116 (2025) (DHCS ACWDL 25-18). Here is where things stand:

• 2024 and 2025: No asset test applied from January 1, 2024 through December 31, 2025
• Asset limit: Since January 1, 2026, the Medi-Cal asset limit is $130,000 for one person plus $65,000 for each additional household member. Under the 2026-27 state budget, the limit drops to $21,000 for an individual and $31,000 for a couple beginning July 1, 2027. (DHCS ACWDL 25-14)
• Community Spouse Resource Allowance (CSRA): The at-home spouse can retain up to $162,660 (2026) in countable assets (DHCS ACWDL 26-02, adjusted annually)
• Spousal income allowance: The at-home spouse may receive enough of the institutionalized spouse's income to bring the at-home spouse up to the Minimum Monthly Maintenance Needs Allowance of $4,067 per month (2026, DHCS ACWDL 26-02).

Exempt vs. Countable Assets

Understanding what Medi-Cal counts is the foundation of all asset protection planning:

Exempt Assets (Not Counted)	Countable Assets (Counted Against You)
Primary residence (California does not currently limit home equity for Medi-Cal eligibility. A federal home equity limit is scheduled to begin in 2028.)	Bank accounts (checking, savings)
One vehicle (any value)	Stocks, bonds, mutual funds
Personal belongings and household goods	Certificates of deposit
Irrevocable burial/funeral plan	Investment accounts
Term life insurance (no cash value)	Non-primary real estate
Wedding/engagement rings	Cash value life insurance
Income-producing property (in some cases)	Vacation homes
Assets in a properly structured irrevocable trust	Boats, RVs, second vehicles
Retirement accounts in payout status (case-specific)	Retirement accounts not in payout status

The Home Exemption Is Not Permanent Protection

Many families mistakenly believe that because their home is exempt for eligibility purposes, it is permanently protected. This is wrong. While you can qualify for Medi-Cal and keep your home, after the Medi-Cal recipient dies, the state can file a claim against a probate estate for long-term care benefits paid after age 55, up to the value of the probate assets, including the home if it passes through probate. This is called Medi-Cal estate recovery (Welfare & Institutions Code §14009.5).

Protecting your home from estate recovery starts with keeping it out of probate, most simply by holding it in a funded living trust. An irrevocable trust is used when the goal is also to protect the home during the look-back period.

The Medi-Cal Look-Back Period (Phased In 2026 to 2028)

What Changed in 2026

From January 1, 2024 through December 31, 2025, California had no Medi-Cal asset test. When AB 116 (2025) reinstated the asset test on January 1, 2026, the transfer rules came back with it. Transfers made from January 1, 2024 through December 31, 2025 are not reviewed and cannot cause a penalty (DHCS ACWDL 25-18).

How the Look-Back Works

The look-back is being phased in (DHCS ACWDL 25-18). For applications starting July 1, 2026, the Department of Health Care Services (DHCS) reviews only months from January 1, 2026 forward, and the window grows by one month each month. The full 30-month look-back applies to applications filed on or after July 1, 2028. Within the window, DHCS looks for any transfer of assets made for less than fair market value, in other words gifts, transfers to family members, or sales at below-market prices.

A penalty applies only if at the time of the transfer you were over the asset limit and transferred nonexempt assets worth more than the statewide average private pay rate. The presumption that a transfer was made to qualify for Medi-Cal can be rebutted, and undue hardship is reviewed first.

If a penalty applies:

1. Medi-Cal calculates the total value of all improper transfers
2. That total is divided by $14,440 per month, the 2026 statewide average private pay rate set by the California Department of Health Care Services (DHCS ACWDL 26-03)
3. The result is a penalty period — a number of months during which Medi-Cal will not cover nursing home costs
4. The penalty period begins on the date you would otherwise be eligible — meaning you must pay privately during this time

There are no partial-month penalties, and the maximum penalty is 30 months (DHCS ACWDL 25-18).

Example: Suppose that in March 2026, while over the asset limit, you gave $72,200 to your daughter, and you apply for Medi-Cal in November 2026. The transfer falls inside the look-back window, so the penalty is $72,200 / $14,440 = 5-month penalty period. You would need to pay privately for 5 months of nursing home care before Medi-Cal coverage begins.

Exceptions to the Look-Back Period

Certain transfers are exempt from the look-back penalty:

• Transfers to a spouse (or for the sole benefit of a spouse)
• Transfers of the home to a child under 21, a blind or disabled child, or a caretaker child who lived in the home for at least 2 years prior to institutionalization and whose care delayed the need for nursing home placement
• Transfers to a trust for a disabled individual under age 65 (see special needs trusts)
• Transfers where the applicant can demonstrate the transfer was made exclusively for a purpose other than Medi-Cal qualification (a difficult standard to meet)
• Transfers where denying eligibility would cause undue hardship

Critical Warning: The Look-Back Clock Is Ticking

With the look-back window growing by one month each month until it reaches the full 30 months on July 1, 2028, every month you delay planning is a month closer to potential penalties. A transfer made today can be reviewed until it falls outside that window.

• If you are 75+ and in good health: plan now
• If you have a family history of dementia or cognitive decline: plan now
• If your spouse is already showing signs of decline: plan now
• If you own a home and want to protect it for your children: plan now

Waiting until a diagnosis or health crisis may not leave enough time for a transfer to fall outside the look-back window, and your assets will be exposed.

Asset Protection Strategies for Medi-Cal Planning

Strategy 1: Irrevocable Trusts (Medi-Cal Asset Protection Trusts)

The most powerful tool for protecting assets from Medi-Cal is an irrevocable trust specifically designed for asset protection. Unlike a standard revocable living trust (which provides no Medi-Cal protection because you retain control), an irrevocable Medi-Cal asset protection trust permanently removes assets from your ownership.

How it works:

1. You transfer assets (typically your home and investments) into the irrevocable trust
2. An independent trustee (usually an adult child) manages the trust assets
3. You cannot revoke the trust, change its terms, or access the principal
4. The trust can be structured to allow you to continue living in your home
5. Once the transfer falls outside the look-back window, the assets are not counted for Medi-Cal eligibility
6. The assets are protected from Medi-Cal estate recovery after your death

Key requirements for Medi-Cal protection:

• The trust must be truly irrevocable — no retained power to revoke or amend
• You cannot retain the right to access the principal (corpus) of the trust
• The trust may allow you to receive income from trust assets (interest, dividends)
• You can retain a life estate or right to use property (e.g., continue living in the home)
• The trust should be funded early enough that the transfer falls outside the look-back window (the full 30 months for applications filed on or after July 1, 2028)

What this costs: See our irrevocable trust cost guide for what an irrevocable Medi-Cal asset protection trust costs, including the trust document, deed transfers, and related estate planning documents. Compare this to $146,000 to $182,135 per year in California nursing home costs (CareScout 2025 medians) that would otherwise deplete your assets.

Strategy 2: Spousal Protections

Federal and state law provide significant protections for the community spouse (the spouse who remains at home while the other enters a nursing facility):

Community Spouse Resource Allowance (CSRA):

• The at-home spouse can retain up to $162,660 (2026) in countable assets (DHCS ACWDL 26-02)
• This is in addition to exempt assets (home, vehicle, personal property)
• If the couple's total countable assets exceed this amount, a "spend-down" is required before the institutionalized spouse qualifies

Community Spouse Monthly Income Allowance (CSMIA):

• The at-home spouse may receive enough of the institutionalized spouse's income to bring the at-home spouse up to the Minimum Monthly Maintenance Needs Allowance of $4,067 per month (2026, DHCS ACWDL 26-02).
• A "fair hearing" can be requested to increase this allowance based on exceptional circumstances

Spousal refusal: California allows a community spouse to refuse to make assets available for the institutionalized spouse's care, effectively allowing the institutionalized spouse to qualify for Medi-Cal while the community spouse retains assets above the CSRA. However, the state may seek to recover from the refusing spouse later.

Strategy 3: Spend-Down Strategies

When excess countable assets exist, strategic spend-down can help achieve eligibility while maximizing the value retained:

• Pay off the mortgage on the primary residence (converts countable cash to exempt home equity)
• Make home improvements — repairs, modifications for aging in place, accessibility upgrades
• Purchase an irrevocable burial plan — funeral and burial expenses become exempt
• Pay off debts — credit cards, loans, medical bills
• Purchase exempt assets — a newer vehicle, household furnishings, personal items
• Prepay property taxes and insurance on the home
• Pay for legal services — establish an irrevocable trust, update your estate plan, create a power of attorney

Strategy 4: Income-Only Trusts

An income-only irrevocable trust allows the grantor to receive income generated by trust assets (interest, dividends, rental income) while the principal (corpus) is inaccessible. Because the grantor cannot access the principal, those assets are not countable for Medi-Cal purposes after the look-back period.

This structure allows seniors to:

• Continue receiving investment income for living expenses
• Protect the underlying assets from Medi-Cal spend-down
• Shield assets from estate recovery after death
• Maintain a home in the trust with a retained right of occupancy

Strategy 5: Caretaker Child Exception

One of the most valuable exceptions to both the look-back period and estate recovery involves the caretaker child. If an adult child lived in the parent's home for at least two years immediately before the parent entered a nursing facility, and the child's care demonstrably delayed the parent's need for institutional care, the home can be transferred to that child without any look-back penalty.

Requirements under federal Medicaid law (42 U.S.C. §1396p):

• The child must have lived in the home for at least 2 years before the parent's institutionalization
• The child must have provided care that delayed the need for nursing home placement
• Documentation from physicians supporting the caretaker role is essential
• The transfer must occur at or around the time of institutionalization

How Living Trusts Interact with Medi-Cal

Revocable Living Trusts: No Medi-Cal Protection

This is one of the most common misconceptions in elder law. A revocable living trust — the standard estate planning trust used to avoid probate — provides zero protection from Medi-Cal. Because you retain full control over a revocable trust (you can amend it, revoke it, and access all assets), Medi-Cal treats every asset in the trust as a countable resource.

A revocable living trust is still a critical estate planning tool. It avoids the costly probate process, provides for efficient trust administration after death, and can save your family tens of thousands in probate fees. But it does not protect assets from Medi-Cal.

Converting a Revocable Trust to an Irrevocable Trust

For clients who already have a revocable living trust, we can restructure the plan to include Medi-Cal protection:

1. Create a new irrevocable Medi-Cal asset protection trust alongside the existing revocable trust
2. Transfer the home and significant assets from the revocable trust to the irrevocable trust
3. Keep day-to-day accounts in the revocable trust for easy management
4. Coordinate beneficiary designations between both trusts
5. Start the look-back clock immediately

This approach preserves the probate avoidance benefits of the revocable trust while adding Medi-Cal asset protection for the most valuable assets.

Medi-Cal Estate Recovery

What Is Estate Recovery?

After a Medi-Cal recipient age 55 or older dies, the California Department of Health Care Services (DHCS) can seek reimbursement for Medi-Cal benefits paid on the recipient's behalf. For deaths on or after January 1, 2017, that recovery is limited in three ways: it reaches only the deceased member's probate estate; there is no recovery when the member is survived by a spouse or registered domestic partner; and it covers only nursing facility services, home and community based services, and related hospital and prescription drug services received at age 55 or older (Welfare and Institutions Code section 14009.5, as amended by SB 833). Heirs can also apply for a hardship waiver.

What the State Can Recover From

DHCS can file claims against:

• Assets that go through probate in the member's name alone, such as a house not held in a living trust or joint tenancy

What the State Cannot Recover From

Assets that pass outside probate are not subject to recovery:

• Assets in a living trust (revocable or irrevocable)
• Joint tenancy property
• Life estates
• Assets passing by beneficiary designation or transfer on death
• Any estate when the member leaves a surviving spouse or registered domestic partner (no recovery when the member is survived by a spouse or registered domestic partner)
• Estates where a hardship waiver is granted

Practical Impact of Estate Recovery

Hypothetical example: the same $900,000 home, owned by a Medi-Cal member who received 2 years of nursing home care. For illustration, the cost of care uses the CareScout 2025 California median private room rate of $15,178 per month, so 24 months comes to $364,272.

Scenario	Home Value	Medi-Cal Benefits Paid (24 x $15,178)	Recovery Claim	Family Inherits
(a) Home in the member's name alone, passes through probate	$900,000	$364,272	$364,272	$535,728 (before probate costs)
(b) Home held in a funded living trust	$900,000	$364,272	$0	$900,000

Nursing Home vs. Home Care: Costs and Medi-Cal Coverage

Cost Comparison (California, 2025 medians)

Type of Care	Monthly Cost	Annual Cost	Medi-Cal Covered?
Nursing home (private room)	$15,178	$182,135	Yes (Institutional Medi-Cal)
Nursing home (semi-private room)	$12,167	$146,000	Yes (Institutional Medi-Cal)
Assisted living facility	$6,900	$82,800	Limited (waiver programs)

Source: CareScout 2025 Cost of Care Survey, California median rates.

In-Home Supportive Services (IHSS)

IHSS is one of the most valuable Medi-Cal benefits for seniors who want to remain at home. The program provides personal care attendants to assist with:

• Bathing, dressing, grooming
• Meal preparation
• Housekeeping and laundry
• Shopping and errands
• Accompaniment to medical appointments
• Paramedical services (with physician authorization)

Key advantage: IHSS can pay family members—including adult children and spouses—to provide care. The caregiver receives an hourly wage set by each county, and the care recipient stays in their home.

Eligibility: IHSS requires Medi-Cal eligibility and an assessment showing the need for assistance with daily activities. There is no separate asset test beyond Medi-Cal eligibility requirements.

Planning for Care at Home: The Preferred Option

Most seniors prefer to remain at home as long as possible, and Medi-Cal supports this through IHSS and HCBS waiver programs. Proper Medi-Cal planning ensures you can qualify for these programs while protecting your assets—often allowing you to stay in your home, receive paid care from a family member, and preserve your estate for your heirs.

→ Learn about our Medi-Cal Planning Services and how we help families create comprehensive long-term care plans

The Role of Powers of Attorney in Medi-Cal Planning

One frequently overlooked element of Medi-Cal planning is incapacity planning. If you become unable to manage your own affairs—whether due to dementia, stroke, or another condition—someone must have the legal authority to:

• Apply for Medi-Cal benefits on your behalf
• Manage your assets and pay bills
• Interact with DHCS and county social services
• Make care decisions including facility placement
• Execute asset protection strategies if not already in place

A durable power of attorney for finances and an advance health care directive are essential. Without them, your family may need a conservatorship—a costly and time-consuming court process. As we discuss in our guide on power of attorney vs. conservatorship, the cost difference is dramatic: a power of attorney costs a fraction of a conservatorship proceeding.

Common Medi-Cal Planning Mistakes

Mistake 1: Assuming Medicare Covers Long-Term Care

Medicare and Medi-Cal are completely different programs. Medicare (federal health insurance for those 65+) covers only limited skilled nursing care—up to 100 days following a qualifying hospital stay, and only for rehabilitative care. It does not cover ongoing custodial care, which is what most seniors in nursing homes receive.

Mistake 2: Giving Away Assets Without Professional Guidance

Transferring your home to your children outright—a common DIY strategy—can backfire in multiple ways:

• Can trigger a look-back penalty if done within the look-back window
• Eliminates the stepped-up tax basis at death, potentially costing your children hundreds of thousands in capital gains taxes
• Exposes the property to your children's creditors, lawsuits, and divorces
• May trigger a property tax reassessment under Proposition 19
• Results in loss of the homeowner's exemption for property taxes

An irrevocable trust avoids most of these problems while still protecting the asset.

Mistake 3: Waiting Until a Health Crisis

With the look-back window growing to the full 30 months by July 1, 2028, last-minute planning is increasingly limited. Families who wait until a parent is diagnosed with dementia or enters a hospital face:

• The look-back period has not been satisfied
• The person may lack capacity to sign legal documents
• Emergency options are expensive and limited
• Conservatorship may be needed to take any action

Mistake 4: Not Considering the Healthy Spouse

When one spouse needs nursing home care, the at-home spouse's financial security is at risk. Without proper planning, the at-home spouse may be left with minimal assets while the other spouse's care consumes the couple's resources. Spousal impoverishment protections exist, but they must be properly utilized through a formal assessment and, in some cases, a fair hearing.

Mistake 5: Ignoring Estate Recovery

Many families focus solely on Medi-Cal eligibility without planning for estate recovery. Even if you qualify, the state can seek repayment from assets that pass through probate after you die, which is why holding your home in a funded living trust matters. Estate recovery planning must be part of the overall strategy from the beginning.

California Code References for Medi-Cal Planning

Key statutes governing Medi-Cal eligibility, transfers, and estate recovery include:

• Welfare & Institutions Code §14006 — Medi-Cal eligibility standards
• Welfare & Institutions Code §14009.5 — Estate recovery provisions
• Welfare & Institutions Code §14015 — Transfer of assets penalties
• Probate Code §15300–15303 — Spendthrift trust provisions
• Probate Code §15400–15414 — Modification and termination of trusts
• 42 U.S.C. §1396p — Federal Medicaid transfer and lien provisions
• 42 U.S.C. §1396r-5 — Spousal impoverishment protections

These statutes interact in complex ways. An attorney experienced in both California trust law and Medi-Cal regulations is essential for proper planning.

Medi-Cal Planning Timeline: When to Start

Medi-Cal Planning Checklist

• Age 60-65: Begin evaluating long-term care options and costs; consider long-term care insurance
• Age 65-70: Consult with a Medi-Cal planning attorney; assess assets and potential exposure
• Age 70-75: Implement irrevocable trust if appropriate; start the look-back clock
• Any age, after diagnosis: Immediately consult an attorney if diagnosed with a progressive condition (Alzheimer's, Parkinson's, ALS)
• Ensure estate plan is current: Update your living trust, power of attorney, and advance health care directive
• Review beneficiary designations: Ensure retirement accounts, life insurance, and POD/TOD designations are coordinated
• Document all asset transfers: Keep records of every transfer for look-back period analysis
• Photograph and inventory the home: Document the condition for potential caretaker child claims
• Discuss plans with your family: Ensure your children understand your wishes and the legal framework
• Review annually: Medi-Cal rules change frequently; review your plan with your attorney annually

How the Look-Back Phase-In Affects Your Timeline

Transfers made in 2024 and 2025 are not reviewed at all. For applications starting July 1, 2026, Medi-Cal looks back only to January 1, 2026, and the window grows by one month each month. Applications filed on or after July 1, 2028 face the full 30-month look-back (DHCS ACWDL 25-18). In practice, the earlier you complete an irrevocable trust or other transfer, the sooner it falls outside the window.

Frequently Asked Questions

What is the Medi-Cal asset limit for long-term care in California in 2026?

California eliminated the Medi-Cal asset test on January 1, 2024, under AB 133 (2021), and reinstated it on January 1, 2026, under AB 116 (2025) (DHCS ACWDL 25-18). Since January 1, 2026, the Medi-Cal asset limit is $130,000 for one person plus $65,000 for each additional household member. Under the 2026-27 state budget, the limit drops to $21,000 for an individual and $31,000 for a couple beginning July 1, 2027. The Community Spouse Resource Allowance (CSRA) allows the at-home spouse to retain up to $162,660 (2026) in countable assets (DHCS ACWDL 26-02), adjusted annually. Additionally, certain asset protection strategies—including irrevocable trusts and exempt asset conversions—can further protect resources beyond these limits. Because eligibility rules differ based on the specific Medi-Cal program, the applicant's living situation, and marital status, a personalized eligibility analysis with a Medi-Cal planning attorney is strongly recommended before making any financial decisions.

Does California have a Medi-Cal look-back period?

Yes, and it is being phased in. California eliminated the Medi-Cal asset test on January 1, 2024, under AB 133 (2021), and reinstated it on January 1, 2026, under AB 116 (2025) (DHCS ACWDL 25-18). Transfers made from January 1, 2024 through December 31, 2025 are not reviewed and cannot cause a penalty. For applications starting July 1, 2026, Medi-Cal reviews only months from January 1, 2026 forward, adding one month each month, and the full 30-month look-back applies to applications filed on or after July 1, 2028 (DHCS ACWDL 25-18). A penalty applies only if, at the time of the transfer, the person was over the asset limit and transferred nonexempt assets worth more than the statewide average private pay rate ($14,440 per month in 2026, DHCS ACWDL 26-03). The presumption that a transfer was made to qualify for Medi-Cal can be rebutted, undue hardship is reviewed first, there are no partial-month penalties, and the maximum penalty is 30 months (DHCS ACWDL 25-18). The penalty period is calculated by dividing the transferred amount by $14,440 per month, the 2026 statewide average private pay rate set by the California Department of Health Care Services. During the penalty period, Medi-Cal will not cover nursing home costs, and the applicant or their family must pay privately. Certain transfers are exempt from the look-back, including transfers to a spouse, transfers of the home to a caretaker child, and transfers to a trust for a disabled person under 65. Planning early enough for transfers to fall outside the look-back window is now essential.

Can I protect my home from Medi-Cal estate recovery in California?

Your home is considered an exempt asset for Medi-Cal eligibility purposes, meaning you can own a home and still qualify for Medi-Cal. California does not currently limit home equity for Medi-Cal eligibility. A federal home equity limit is scheduled to begin in 2028. However, "exempt for eligibility" does not mean "protected from recovery." After a Medi-Cal recipient age 55 or older passes away, DHCS can seek reimbursement from the estate, but only from assets that pass through probate (Welfare and Institutions Code section 14009.5, as amended by SB 833). If the home passes through probate and is the main asset, the family may have to sell it to pay the state's claim. Several strategies can protect the home: holding the home in a funded living trust, so it passes outside probate; transferring it to a properly structured irrevocable trust early enough that the transfer falls outside the look-back window; qualifying for the caretaker child exception by documenting that an adult child lived in the home for at least two years and provided care that delayed institutionalization; or transferring to a surviving spouse (no recovery when the member is survived by a spouse or registered domestic partner). Each strategy has specific requirements that must be precisely followed.

What is the difference between exempt and countable assets for Medi-Cal?

This distinction is the cornerstone of Medi-Cal planning. Exempt assets are resources that Medi-Cal does not count when determining whether you meet the financial eligibility requirements. Exempt assets include your primary residence, one vehicle of any value, personal belongings and household goods, irrevocable burial and funeral plans, term life insurance with no cash value, and wedding and engagement rings. California does not currently limit home equity for Medi-Cal eligibility. A federal home equity limit is scheduled to begin in 2028. Countable assets are resources that Medi-Cal does count against you, including bank accounts, investment accounts, stocks, bonds, certificates of deposit, cash value life insurance policies, non-primary real estate, and generally retirement accounts not currently in payout status. The strategic goal of Medi-Cal planning is to convert countable assets into exempt assets or to move them outside your ownership through legally permissible methods. For example, paying down a mortgage converts countable cash into exempt home equity, and purchasing an irrevocable burial plan converts countable cash into an exempt asset.

How does a living trust affect Medi-Cal eligibility in California?

A standard revocable living trust—the type most Californians use for estate planning—does not protect assets from Medi-Cal. Because you retain the power to revoke, amend, and access assets in a revocable trust, Medi-Cal treats all assets held in the trust as your countable resources, just as if you held them in your own name. An irrevocable trust, by contrast, can protect assets from Medi-Cal if it is properly structured and funded early enough that the transfer falls outside the Medi-Cal look-back window (the full 30 months for applications filed on or after July 1, 2028). The key requirement is that the trust must genuinely remove your access to the trust principal. You may retain the right to receive income from the trust and even the right to live in a home held by the trust, but you cannot retain any right to access, withdraw, or control the underlying assets. Improperly drafted irrevocable trusts—particularly those that give the grantor a right to demand distributions of principal—will be treated as countable resources. This is an area where working with an attorney who understands both California trust law and Medi-Cal regulations is critical to avoid common estate planning mistakes.

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Take Action Now to Protect Your Family's Assets

The cost of long-term care in California is staggering, and the window for effective Medi-Cal planning narrows every year. With the look-back period being phased in to the full 30 months by July 1, 2028, there is no advantage to waiting—and significant risk in delay.

We help California families with:

• Medi-Cal eligibility analysis and planning strategies
• Irrevocable Medi-Cal asset protection trusts
• Spousal impoverishment protections and CSRA maximization
• Coordinated estate plans with living trusts, powers of attorney, and advance directives
• Medi-Cal application assistance and fair hearing representation
• Estate recovery defense and planning
• IHSS and home care planning
• Comprehensive elder law and asset protection strategies

Every month you delay is a month closer to the full 30-month look-back. Call (818) 337-4071 or visit our contact page to schedule a Medi-Cal planning consultation.

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About the Author

Rozsa Gyene (State Bar No. 208356) is a California estate planning and elder law attorney serving families throughout California. With deep experience in Medi-Cal planning, irrevocable trusts, asset protection, and long-term care strategies, Rozsa helps families navigate the complex intersection of estate planning and Medi-Cal eligibility to protect their homes and life savings.

Office Location: 3500 W. Olive Ave., Suite 300, Burbank, CA 91505

Phone: (818) 337-4071

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Disclaimer: This article provides general information about Medi-Cal planning and asset protection for long-term care in California and should not be construed as legal advice. Medi-Cal eligibility rules are complex, change frequently, and vary by individual circumstance. This article reflects California law and Medi-Cal rules as of October 2026. The figures cited (asset limit, CSRA, MMMNA, average private pay rate) are set by DHCS and adjusted periodically. Consult with a qualified attorney about your specific situation before making legal or financial decisions.

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