Medi-Cal Eligibility Rules Are Changing on January 1, 2026
Beginning January 1, 2026, California will reinstate a resource (asset) limit for Medi-Cal long-term care eligibility (as well as eligibility for community benefits). After several years in which most asset limits were temporarily eliminated, Medi-Cal is returning—at least in part—to a pre-2024 style asset test that often caps an applicant’s assets at $130,000. For many California families, this change will significantly affect planning for nursing home care, assisted living, and community-based long-term care services.
If you or a loved one may need long-term care in the coming years, understanding these changes now is critical. This article explains the new Medi-Cal eligibility rules, how they compare to recent years, and what planning strategies—such as a Medi-Cal Asset Protection Trust (MAPT)—may help protect assets while preserving eligibility.
A Brief Overview of Medi-Cal
Medi-Cal is California’s Medicaid program. It provides health coverage for low-income individuals, seniors, and people with disabilities. Importantly, Medi-Cal is also the primary payer for long-term care in California, including:
Nursing home (skilled nursing facility) care
Assisted living under an Assisted Living Waiver (ALW) / Home and Community-Based Services (HCBS) Waiver
In-home care through programs such as In-Home Supportive Services (IHSS)
Other community-based long-term care benefits
Because long-term care costs in California can easily exceed $10,000–$12,000 per month, Medi-Cal eligibility is often essential for middle-class families who could otherwise see lifetime savings wiped out. However, even individuals and families with some means (a received inheritance, for instance) may benefit from planning in advance for potential, future long-term care via Medi-Cal Asset Protection Trust, especially where the anticipated long-term or disability care period is lengthy. There is no reason why a younger, physically disabled person who inherited a home or other property should not at least meet with an elder law attorney to discuss Medi-Cal planning options to determine whether protecting the inheritance may make practical sense under that individual’s circumstances.
What Changed in 2024—and Why 2026 Matters
The 2024–2025 No-Asset-Limit Period
As of January 1, 2024, California eliminated the traditional asset limit for most Medi-Cal programs. During 2024 and 2025:
Applicants generally did not have to meet a resource cap
Eligibility focused primarily on income, not assets
Many individuals qualified for Medi-Cal long-term care even with substantial savings
This change represented a major shift in Medi-Cal eligibility rules and reduced the urgency of asset protection planning for some families.
The Return of the Asset Test in 2026
That period is coming to an end.
Effective January 1, 2026, Medi-Cal will reinstate an asset limit for long-term care and community-based programs.
Under the new rules:
Single applicant: Asset limit of $130,000
Married couple: Asset limit of $195,000
These figures mirror the pre-2024 Medi-Cal resource rules, subject to inflation adjustments and program-specific nuances. For perspective, the asset limit in many other states is just $2,000!
Note that, with couples who are married or are registered domestic partners, Medi-Cal may allow an increased asset limit under Medi-Cal’s spousal impoverishment rules. Spousal impoverishment recognizes each spouse as being a separate household unit and permits a slightly higher resource limit: the applicant spouse may retain $130,000 in countable assets while the community (non-applicant) spouse may retain $157,920 in countable assets, for a total of $287,920 in countable assets. The $157,920 that the community spouse is allowed to keep is referred to as the Community Spouse Resource Allowance (CSRA) and is generally slightly increased each year.
What Assets Count for Medi-Cal Eligibility?
Understanding what is considered a “countable” asset (or resource) is just as important as knowing the dollar limits.
Common Countable Assets
Countable assets for Medi-Cal eligibility typically include:
Cash and bank accounts
Stocks, bonds, and mutual funds
Non-retirement investment accounts
Additional real property (other than a primary residence)
Certain trusts
If the total value of these assets exceeds the applicable limit, the applicant may be ineligible for Medi-Cal long-term care until excess assets are reduced (“spent down” appropriately) or repositioned. It is strongly advised that a Medi-Cal “spend down” project be undertaken under the guidance of a California elder law attorney.
Common Exempt Assets
Some assets are generally exempt, including:
A primary residence (subject to equity limits and intent-to-return rules)
One vehicle
Household personal property
Certain retirement accounts, depending on payout status
Assets properly held in a compliant Medi-Cal Asset Protection Trust
The distinction between countable and exempt assets is often complex and highly fact-specific.
“I have a rental property in Arizona. Is that countable?” If that property is not your primary residence, yes, it is countable. If your primary residence is your home in California, then the Arizona rental property will be counted. (If the rental constitutes a profitable business, the property may or may not be non-countable/exempt.)
“I have a car and my spouse has a car. Can we each keep one vehicle?” One vehicle is automatically exempt. A second vehicle would eat into the asset limit. In this example, if the married couple treats the applicant spouse’s vehicle as being exempt (the “one vehicle” exemption), then the community spouse’s vehicle would count against his or her $157,920 CSRA, assuming that spousal impoverishment protections are in place.
Special Rules for Married Couples: Spousal Impoverishment Protections
For married applicants, Medi-Cal includes important spousal impoverishment protections designed to prevent the healthy spouse from becoming destitute.
The Community Spouse Resource Allowance (CSRA)
When one spouse applies for Medi-Cal long-term care and the other remains at home (the “community spouse”), the community spouse may retain assets up to the Community Spouse Resource Allowance (CSRA).
Key points:
The CSRA allows the community spouse to keep a larger share of marital assets
The institutionalized spouse may qualify for Medi-Cal even if total marital assets exceed the standard $195,000 cap
Proper asset allocation between spouses is critical
Spousal impoverishment rules remain one of the most powerful planning tools for married couples—but they require careful implementation. As of the initial date of this article, the 2026 CSRA amount has not been released.
How the 2026 Changes Affect Long-Term Care Planning
The return of an asset limit means that advance planning is once again essential.
Without planning:
Families may be forced to spend down assets rapidly
Lifetime savings intended for a surviving spouse or children may be depleted
Last-minute transfers can trigger penalties or delays. Medi-Cal’s 30-month transfer lookback is reinstated as of January 1, 2026.
With proper planning:
Assets may be preserved for a spouse or heirs
Eligibility for Medi-Cal long-term care can be maintained
Families gain predictability and peace of mind
Medi-Cal Asset Protection Trust (MAPT): A Key Planning Tool
One of the most commonly discussed strategies for Medi-Cal planning is the Medi-Cal Asset Protection Trust, often abbreviated as MAPT.
What Is a Medi-Cal Asset Protection Trust?
A Medi-Cal Asset Protection Trust is a type of irrevocable trust designed to:
Remove assets from the Medi-Cal applicant’s countable estate
Preserve assets for family members
Comply with Medi-Cal eligibility rules
When structured correctly, assets transferred to a MAPT are no longer considered countable for Medi-Cal eligibility after the applicable look-back period.
The Medi-Cal Look-Back Period
Medi-Cal imposes a look-back period for asset transfers – even where the community (non-applicant) spouse is the income beneficiary. Transfers made within this period can result in a penalty period of ineligibility. Again, it is common for adult children to be the lifetime MAPT beneficiaries; if there are no children, the community spouse may be the income beneficiary (but not the beneficiary of trust principal). However, each of these transfers will create a penalty period for 30 months from the date of the transfer to the MAPT.
Key considerations:
Planning must be done well in advance of the need for care
Crisis planning options are more limited
Early planning provides significantly more flexibility
A MAPT is most effective when implemented before care is imminent. A MAPT may not be a viable planning tool if the family is already in crisis.
With married couples, note that Medi-Cal long-term care eligibility often involves planning for both spouses – the applicant spouse needs to spend down to below $130,000, and the community spouse needs to spend down to below their CSRA amount. If the community spouse’s assets exceed the applicable CSRA amount, his or her assets will need to be appropriately spent down. A single premium immediate annuity (SPIA) or private annuity may be used to accomplish the CSRA spend down for the community spouse.
Note also that there is no lookback period and there are no transfer penalties for Medi-Cal community benefits programs such as IHSS/HCBS. However, making transfers that would create a penalty period for Medi-Cal programs that do utilize a transfer lookback period is a gamble – what if the applicant later needs more care than anticipated and needs to apply for a Medi-Cal program that will impose a transfer penalty? It is always advisable not to make any transfers before retaining a California elder law attorney.
Common Assets Placed Into a MAPT
Assets commonly transferred into a Medi-Cal Asset Protection Trust include:
A primary residence
Non-retirement investment accounts
Savings accounts
Brokerage accounts
Each asset type carries different tax, control, and income implications that must be carefully evaluated.
Income vs. Assets: An Important Distinction
It is important to understand that Medi-Cal eligibility involves both income rules and asset rules.
The MAPT primarily addresses assets, not income
Income received by the applicant may still need to be contributed toward the cost of care
Many non-MAGI Medi-Cal programs, including Working Disabled Medi-Cal, impose on the applicant a $1,801 monthly income cap (as of 2025)
Additional tools (such as income diversion or annuities) may be necessary
A comprehensive plan often involves more than one legal strategy and the applicable income limit may vary depending on the type of Medi-Cal program for which the applicant is seeking eligibility.
Community-Based Medi-Cal Programs Are Also Affected
As stated above, the 2026 asset limits and income limits apply not only to nursing home care, but also to many community-based Medi-Cal programs, including:
Assisted Living Waiver (ALW)
Home and Community-Based Services (HCBS)
Certain long-term care waiver programs
Many families mistakenly assume that asset rules apply only to nursing homes. In reality, community benefits are often subject to similar eligibility requirements.
While many families may desire to care for their loved one at home with community-based Medi-Cal, it is important to know that community-based programs such as Assisted Living Waivers and Board and Care Waivers can vary county by county and often have very long waitlists. In addition, the number of home-care hours for which the Medi-Cal community benefits applicant may qualify may not be sufficient – or the program may be understaffed and unable to provide the requisite number of hours.
In assessing which Medi-Cal program may be most appropriate for the family member’s care needs, you may wish to consult with a Geriatric Care Manager (GCM) or county Human Services Agency.
Common Mistakes to Avoid
With Medi-Cal eligibility rules changing, families should be cautious about:
Making large gifts without understanding the look-back rules
Relying on outdated advice from the 2024–2025 no-asset-limit period
Adding children to title without legal analysis
Using generic online trust forms
Mistakes can be costly and difficult—if not impossible—to undo. As I have said, you would be wise not to make any transfers without the advice of a retained elder law attorney. If capacity is an issue (i.e., due to Alzheimer’s or dementia), an elder law attorney often works with an already-designated power of attorney.
Why Planning Before 2026 Matters
Although the new asset limits take effect on January 1, 2026, planning should begin well before then.
Early planning allows:
Greater choice among legal strategies
Reduced risk of penalties
Better preservation of family wealth
Waiting until a health crisis occurs often limits options, increases stress, and prevents flexible options.
Even though 2026 is right around the corner, asset planning in 2026 via a Medi-Cal Asset Protection Trust can get the 30-month transfer period going and give the family peace of mind for potential, future Medi-Cal eligibility.
How an Estate Planning Attorney Can Help
Medi-Cal planning sits at the intersection of:
Estate planning
Public benefits law
Tax law
Elder law
An experienced attorney can:
Analyze Medi-Cal eligibility under the new 2026 rules
Design and implement a Medi-Cal Asset Protection Trust
Coordinate spousal impoverishment strategies
Identify cashflow and tax issues
Ensure compliance with evolving regulations
Every family’s situation is different, and there is no one-size-fits-all solution.
Final Thoughts
The reinstatement of Medi-Cal asset limits on January 1, 2026 marks a major shift in Medi-Cal eligibility planning. With asset caps returning to approximately $130,000 for single applicants and $195,000 for married couples—subject to spousal impoverishment protections—Californians once again need to plan carefully to protect savings from long-term care costs. Learn more on my California elder law page on this website here.
Tools such as a Medi-Cal Asset Protection Trust (MAPT) can play a vital role, but only when used correctly and proactively. If long-term care may be part of your future or the future of someone you love, now is the time to understand your options and plan accordingly.
This article is for informational purposes only and does not constitute legal advice. Medi-Cal rules are complex and subject to change. Consult a qualified elder law attorney regarding your specific situation.
