Medi-Cal Asset Limits Return: Act Now 2026

Quick answer: California eliminated the Medi-Cal asset test in January 2024, but that change expires on January 1, 2026. Starting that date, long-term care Medi-Cal will again require individuals to have no more than $130,000 in countable assets (plus $65,000 per additional household member). Transfers made on or after January 1, 2026 can trigger penalty periods. Transfers made during 2024 and 2025 will not be penalized. That gives families planning right now a shrinking window to act.

Margaret, 78, is still living independently in her Camarillo home, but her daughter knows the math: a skilled nursing facility in Ventura County runs $12,000 to $14,000 a month. When Margaret eventually needs that level of care, the family will need Medi-Cal. For two years, that planning felt almost leisurely — California had dropped asset limits entirely. Starting January 1, 2026, the asset test comes back. Margaret’s savings above $130,000 could disqualify her, and any gifts she makes after January 1, 2026 may create a waiting period before Medi-Cal will pay. The window is open right now. It will not stay open.

What Changed — and What Is Changing Again

In January 2024, California eliminated the asset test for most Medi-Cal programs. That was a genuine benefit for families: applicants no longer had to impoverish themselves to qualify. The Legislature tied that elimination to a budget provision set to expire, and it did. As of January 1, 2026, the asset limit is back — restored to its 2022 levels per California Department of Health Care Services (DHCS) guidance. See the DHCS asset limit FAQ and the DHCS fact sheet (PDF) for the official numbers.

This affects non-MAGI Medi-Cal — that is, programs not based on the Affordable Care Act’s income rules. Long-term care Medi-Cal for skilled nursing facility coverage is the primary program families need to understand here.

The New Asset Limit: What the Numbers Mean

The reinstated limits are:

• $130,000 for an individual
• $130,000 for the institutionalized spouse in a married couple, plus up to the Community Spouse Resource Allowance (CSRA) for the spouse still living at home (CSRA adjusts annually; for 2026 it is approximately $157,920)
• $65,000 for each additional household member beyond the first

Countable assets include cash, bank accounts, stocks, bonds, mutual funds, and secondary real property. Exempt assets — things Medi-Cal does not count against the limit — include:

• One primary residence (with intent to return home)
• One vehicle
• Household goods and personal effects
• IRAs and pension accounts that are in periodic-distribution status
• Whole life insurance with a face value under $1,500
• Irrevocable prepaid burial plans and up to $1,500 in designated burial funds

If you are over the limit, you do not simply get disqualified forever. You must “spend down” — use countable assets on care, medical bills, or allowable transfers — until you reach the threshold. That spend-down can wipe out a lifetime of savings in months.

When Will Medi-Cal Review Your Assets?

New applicants who apply on or after January 1, 2026 face the asset test immediately at application. Current Medi-Cal recipients face review at their first annual renewal or at a change of circumstances after January 1, 2026. If your renewal falls in August 2026, you have until then — but you will still face it.

Transfer Penalties Are Back Too

The asset limit is only part of the picture. The other piece families need to understand is the transfer penalty — what DHCS calls a “penalty period” for long-term care Medi-Cal.

Here is how it works: if you give away countable assets to qualify for Medi-Cal, the state calculates a period during which it will not pay for your skilled nursing care. The length of that period depends on how much you transferred divided by California’s Average Private Pay Rate (APPR) — the average daily private-pay cost of nursing home care in California. The 2026 APPR is $14,440 per month.

The look-back period for long-term care Medi-Cal in California is 30 months. That means the state will examine asset transfers going back 30 months from the date you apply for nursing home coverage. Critically, transfers made during 2024 and 2025 will not be penalized — DHCS has confirmed this in its guidance. Only transfers made on or after January 1, 2026 can trigger a penalty. That makes 2025 — and specifically the time remaining in 2025 — a meaningful planning window for some families. See CANHR’s 2026 FAQ for a plain-English breakdown.

Transfers below the APPR threshold ($14,440 for 2026) will not be counted. Transfers of exempt assets are also penalty-free. But outright gifts of cash or property to adult children intended to reduce countable assets will be scrutinized.

The One-Year Planning Window — What Families Should Do Now

The most important thing to understand is that you are not powerless. There are legal strategies that can protect assets without triggering penalties and without violating Medi-Cal rules. The key is acting before circumstances force your hand.

Irrevocable Trusts and Medi-Cal Planning

Certain irrevocable trust structures — when properly drafted and funded — can remove assets from Medi-Cal’s countable pool. Because of the look-back period, trusts funded in 2025 may offer more flexibility than trusts funded after penalties begin applying to transfers. Timing matters enormously here. An asset protection attorney can evaluate whether this approach fits your family’s situation.

Spousal Protection Strategies

For married couples, spousal impoverishment protections under federal law limit how much the “community spouse” — the one still at home — must contribute to the nursing facility spouse’s care. The CSRA protects a significant chunk of combined assets, but the rules are technical and require careful documentation. Without a plan, the community spouse can end up spending down far more than the law requires.

Annuities and Income-Only Strategies

Converting countable assets into income streams through Medi-Cal-compliant annuities is another tool. These must be structured precisely — wrong terms disqualify the strategy entirely. This is not a do-it-yourself area.

Estate Planning Documents

Any Medi-Cal plan needs to sit inside a broader estate plan. That means updated powers of attorney for finances and health care, and often a revocable living trust to handle the primary residence and other assets outside probate. If you have a family member with a disability who might eventually need means-tested benefits, a special needs trust may also belong in the picture.

Families who call Ridley Law in the next few months have options. Families who call after a crisis — when a parent is already in a skilled nursing facility and the application clock is running — have fewer. Ridley Law has helped Ventura County families with estate planning and long-term care planning since 2010. To schedule a free consultation, call (805) 244-5291.

Frequently Asked Questions

Did California permanently eliminate the Medi-Cal asset test?

No. California removed the asset test for non-MAGI Medi-Cal programs effective January 2024, but that elimination was always tied to a budget provision set to expire. The asset limit returns on January 1, 2026, restored to its 2022 levels: $130,000 for an individual, plus $65,000 per additional household member. The California Department of Health Care Services has published official guidance confirming this at dhcs.ca.gov.

Will Medi-Cal penalize transfers I made in 2024 or 2025?

No. DHCS has confirmed that only transfers made on or after January 1, 2026 can trigger transfer penalties for long-term care Medi-Cal. Transfers made in 2024 and 2025 will not be counted in any penalty calculation. This is one reason why families who act in 2025 may have more options than those who wait.

What assets does Medi-Cal count toward the $130,000 limit?

Countable assets include cash, checking and savings accounts, investment and brokerage accounts, stocks and bonds, and real property other than your primary home. Exempt assets — not counted against the limit — include your primary residence, one vehicle, household goods, most pension and IRA accounts that are paying out regularly, and irrevocable prepaid burial arrangements. The full list is detailed in the CANHR asset limits fact sheet.

Is there anything a married couple can do to protect the spouse at home?

Yes. Federal spousal impoverishment rules protect the community spouse — the partner still living at home — from having to spend all combined assets on nursing care. For 2026, the Community Spouse Resource Allowance lets the at-home spouse keep approximately $157,920 in countable assets. Beyond that, there are income-diversion strategies and, in some cases, trust planning that can further protect the community spouse. These rules interact with the asset limit and the transfer penalty rules in complex ways, so getting legal advice before filing an application is worth the time.