Can Medi-Cal Take My Home Equity? Protecting Your Home in California

Short Answer

Yes, Medi-Cal can potentially claim your home equity under estate recovery rules, but California law provides several exemptions and planning strategies. With proactive asset protection and careful estate planning, seniors can preserve their principal residence while qualifying for Medi-Cal long-term care benefits.

Introduction: The Intersection of Home Equity and Medi-Cal

For many seniors, their home represents both financial security and a lifetime of memories. However, when long-term care becomes necessary, Medi-Cal (California Medicaid) may starting January 1, 2026, once again evaluate your assets, including home equity, to determine eligibility and potentially pursue estate recovery after death.

At Moravec Varga & Mooney, we help families navigate the complex rules surrounding Medi-Cal eligibility, asset protection, and estate planning, ensuring that long-term care coverage does not jeopardize the family home or other key assets. Understanding how Medi-Cal interacts with home equity is critical to making informed financial and healthcare decisions.

1. How Medi-Cal Treats Home Equity

Starting January 1, 2026 Medi-Cal is once again an asset-tested program, meaning your eligibility depends on whether your total assets exceed the program’s asset limits. The treatment of your principal residence is nuanced:

• Exempt Asset: The primary home is generally considered an exempt asset while the recipient or a spouse resides there.

• Equity Limits: California sets a maximum home equity value that can still qualify for Medi-Cal long-term care services. Assets exceeding this value may affect eligibility.

• Non-Resident Situations: If neither you nor a spouse lives in the home, Medi-Cal may consider it a countable asset, impacting asset qualification.

Additionally, if a beneficiary sells the home or the property passes through probate, Medi-Cal estate recovery may claim reimbursement for long-term care costs.

2. Eligibility and Asset Rules

Medi-Cal Asset Test Essentials

1. Asset Limits: Seniors applying for Medi-Cal must meet asset restrictions that exclude certain exempt property, such as the primary residence, personal vehicle, and basic household items.

2. Countable Assets: Cash, stocks, second vehicles, additional real estate, and non-exempt property count toward the asset test.

3. Income vs. Assets: Eligibility is determined by both income limitations and asset limits, so careful financial planning is essential.

Exemptions That Protect Home Equity

• Principal Residence: The family home is typically exempt if a spouse, minor, or disabled person resides there.

• Equity Cap: Medi-Cal allows a modest equity amount to remain exempt ($750,000, indexed annually by CPI (since 2011), with exceptions (e.g., spouse or a child under 21/blind/disabled residing in the home, or hardship), protecting seniors from being forced to sell their home immediately.

• Long-Term Care Planning: Using asset protection strategies, like trusts or estate planning tools, may safeguard home equity from both asset tests and future estate recovery claims.

3. Strategies to Protect Home Equity

A. Utilize Exemptions and Estate Planning

• Trusts: Transferring the home to an irrevocable trust can protect home equity while maintaining Medi-Cal eligibility.

• Life Estate Retention: Seniors can retain life estates, allowing them to live in the home while passing ownership to heirs.

• Asset Planning: Coordinating with an estate planning attorney ensures your primary residence remains exempt from asset counting and estate recovery.

B. Spousal Protections

• Community Spouse Rules: Medi-Cal rules allow a spouse to retain non-exempt assets and the primary residence, reducing financial strain.

• Spousal Share Planning: Proper planning ensures a spouse retains adequate resources without jeopardizing Medi-Cal coverage.

C. Additional Asset Management Tools

• Long-Term Care Insurance: Reduces reliance on Medi-Cal, preserving home equity.

• Out-of-Pocket Payments: Covering some care costs directly can protect assets while qualifying for Medi-Cal.

• Estate Planning Coordination: Combining wills, trusts, and asset transfers ensures compliance with Medi-Cal restrictions.

4. Medi-Cal Estate Recovery and Your Home

Even with careful planning, home equity may be subject to Medi-Cal estate recovery after death:

• Recovery Claims: Medi-Cal can place a lien on the home to recover the cost of nursing home, skilled nursing services, or other Medi-Cal benefits.

• Hardship Waivers: California allows waivers to prevent undue hardship for surviving family members.

• Exempt Transfers: Transfers to certain heirs or into trusts may avoid or reduce claims.

Proactive planning with an elder law attorney is essential to protect your home and ensure a smooth estate settlement.

Conclusion: Secure Your Home and Legacy

Navigating Medi-Cal eligibility and estate recovery can be complex, but careful planning protects your home equity, assets, and beneficiaries. At Moravec Varga & Mooney, we provide comprehensive guidance on Medi-Cal long-term care planning, asset protection, and estate management.

📞 Call Moravec Varga & Mooney today for a confidential consultation. Let our estate planning attorneys help you safeguard your home, qualify for Medi-Cal, and secure your financial future for your loved ones.