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. 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.

As a Glendale estate planning attorney who helps families throughout Los Angeles and Santa Barbara Counties 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	$1,732/month (individual)	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
AB 1900 Expanded Medi-Cal	No asset test	138% FPL ($1,732/month)	Limited

Important note: California's AB 1900 (Asset Limit Elimination Act) removed asset limits for most Medi-Cal programs. However, for institutional Medi-Cal (nursing home coverage), federal rules still apply, and the look-back period enacted in 2024 now affects eligibility for applicants seeking nursing facility level of care.

Medi-Cal Eligibility Rules for 2026

Income Limits

For most Medi-Cal programs in 2026, the income limit is set at 138% of the Federal Poverty Level:

• Individual: approximately $1,732/month
• Couple: approximately $2,351/month

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 and the AB 1900 Changes

California made headlines by eliminating asset limits for most Medi-Cal programs under AB 1900. However, the practical impact for long-term care planning is nuanced:

• Community Medi-Cal: No asset test as of January 1, 2024
• Institutional Medi-Cal (nursing home): Federal SSI-related resource limits may still apply — $2,000 for an individual, $3,000 for a couple — depending on the specific eligibility pathway
• Community Spouse Resource Allowance (CSRA): The at-home spouse can retain up to $154,140 in countable assets (2026 figure, adjusted annually)
• Community Spouse Monthly Income Allowance (CSMIA): The at-home spouse may retain up to $3,853.50/month of the institutionalized spouse's income (2026 figure)

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 (equity up to ~$1,071,000)	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 30-Month Look-Back Period

What Changed in 2024

California was historically one of the most lenient states for Medi-Cal planning because it had no look-back period. Families could transfer assets immediately before applying for institutional Medi-Cal with no penalty. That changed on January 1, 2024, when California implemented a 30-month look-back period for institutional and nursing facility level of care.

How the Look-Back Works

When you apply for institutional Medi-Cal, the Department of Health Care Services (DHCS) will review all financial transactions from the 30 months preceding your application date. They are looking 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.

If disqualifying transfers are found:

1. Medi-Cal calculates the total value of all improper transfers
2. That total is divided by the average monthly private pay rate for nursing home care in California (approximately $12,500/month as of 2026)
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

Example: You transferred $75,000 to your daughter 18 months before applying for Medi-Cal. The penalty calculation: $75,000 / $12,500 = 6-month penalty period. You would need to pay privately for 6 months of nursing home care ($75,000) 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

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. After the 30-month look-back period passes, 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 must be funded at least 30 months before applying for Medi-Cal

What this costs: An irrevocable Medi-Cal asset protection trust typically costs $3,000–$6,000 to establish, including the trust document, deed transfers, and related estate planning documents. Compare this to the $120,000–$180,000 per year in nursing home costs 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 $154,140 in countable assets (2026)
• 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 keep up to $3,853.50/month from the couple's income
• If the at-home spouse's own income is below the minimum maintenance needs allowance ($2,465/month in 2026), they may receive a larger share of the institutionalized spouse's income
• 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 30-month 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. This includes nursing home care, hospital stays, prescription drugs, and other covered services. The legal authority is California Welfare & Institutions Code §14009.5.

What the State Can Recover From

DHCS can file claims against:

• Probate estate assets — anything that goes through probate
• Real property owned at death (including the formerly exempt home)
• Assets in a revocable trust at the time of death
• Joint tenancy property (in some cases)
• Life estate interests

What the State Cannot Recover From

Properly planned assets are protected:

• Assets in a properly structured irrevocable trust (funded beyond the look-back period)
• Assets transferred to the community spouse under spousal protections
• Property transferred to a caretaker child meeting the requirements
• Property transferred to a disabled or blind child
• Assets when a surviving spouse is still living (recovery is deferred)
• Assets when recovery would cause undue hardship (very narrow exception)

Practical Impact of Estate Recovery

Scenario	Home Value	Medi-Cal Benefits Paid	Recovery Amount	Family Inherits
No planning	$900,000	$360,000 (2.5 years)	$360,000	$540,000
No planning, long stay	$900,000	$600,000 (4 years)	$600,000	$300,000
Irrevocable trust (30+ months before)	$900,000	$360,000	$0	$900,000
Caretaker child transfer	$900,000	$360,000	$0	$900,000

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

Cost Comparison (Southern California, 2026)

Type of Care	Monthly Cost	Annual Cost	Medi-Cal Covered?
Skilled nursing facility (private room)	$13,000–$16,000	$156,000–$192,000	Yes (Institutional Medi-Cal)
Skilled nursing facility (semi-private)	$10,000–$13,000	$120,000–$156,000	Yes (Institutional Medi-Cal)
Assisted living facility	$5,500–$9,000	$66,000–$108,000	Limited (waiver programs)
In-home care (non-medical, 8 hrs/day)	$5,600–$7,200	$67,200–$86,400	Yes (IHSS, if eligible)
In-home care (24-hour live-in)	$10,000–$14,000	$120,000–$168,000	Partial (IHSS hours capped)
Adult day care (5 days/week)	$2,000–$3,500	$24,000–$42,000	Yes (CBAS)

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 (approximately $17–$20/hour in Los Angeles County as of 2026) 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.

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 under $800 compared to $10,000+ for a conservatorship.

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:

• Triggers the 30-month 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 30-month look-back period, 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 for Medi-Cal and receive benefits for years, the state can recover the full amount paid from your estate after you pass away. Estate recovery planning must be part of the overall strategy from the beginning.

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; begin 30-month 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

The 30-Month Planning Horizon

Given California's look-back period, the ideal planning timeline looks like this:

Planning Stage	Timeline	Actions
Assessment	Month 1	Attorney consultation, asset inventory, eligibility analysis
Strategy Design	Months 1-2	Trust drafting, spend-down plan, spousal protection strategy
Implementation	Months 2-3	Fund irrevocable trust, transfer home, reposition assets
Look-Back Period	Months 3-33	Wait 30 months; maintain documentation; no additional transfers
Eligibility	Month 33+	Apply for Medi-Cal with confidence; all transfers outside look-back

Frequently Asked Questions

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

California eliminated asset limits for most Medi-Cal programs through the Asset Limit Elimination Act (AB 1900), effective January 1, 2024. This was a significant change that expanded access to Medi-Cal for many Californians. However, for institutional Medi-Cal covering nursing home care, federal rules still play a role, and the practical interplay between state and federal requirements creates complexity. The Community Spouse Resource Allowance (CSRA) allows the at-home spouse to retain up to $154,140 in countable assets in 2026, which is adjusted annually for inflation. 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. Effective January 1, 2024, California implemented a 30-month look-back period for transfers of assets made for less than fair market value when applying for institutional Medi-Cal or nursing facility level of care. This was a major change—California was previously one of the few states with no look-back period, making last-minute asset transfers possible. Now, DHCS examines all financial transactions from the 30 months prior to the Medi-Cal application date. If disqualifying transfers are found, a penalty period is calculated by dividing the transferred amount by the average monthly nursing home cost (approximately $12,500 in Southern California). 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 at least 30 months before the anticipated need for care 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, provided your home equity does not exceed approximately $1,071,000 (2026 figure, adjusted annually). However, "exempt for eligibility" does not mean "protected from recovery." After a Medi-Cal recipient age 55 or older passes away, DHCS can file a claim against the estate under Welfare & Institutions Code §14009.5 to recover the total amount of Medi-Cal benefits paid. If the home is the primary estate asset, the family may be forced to sell it to satisfy the state's claim. Several strategies can protect the home: transferring it to a properly structured irrevocable trust at least 30 months before applying for Medi-Cal; 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 (recovery is deferred while the surviving spouse lives). 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 (subject to an equity limit of approximately $1,071,000), 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. 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 at least 30 months before the Medi-Cal application (to clear the look-back period). 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 30-month look-back period now in effect, 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 30-month look-back window. Call (818) 291-6217 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 Los Angeles and Santa Barbara Counties. 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: 450 N Brand Blvd, Suite 600, Glendale, CA 91203

Phone: (818) 291-6217

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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 March 2026. The figures cited (CSRA, income limits, home equity limits) are approximate and subject to annual adjustment. Consult with a qualified attorney about your specific situation before making legal or financial decisions.

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