The Return of the Asset-Based Test for Medi-Cal: What Californians Need to Know

For years, California has been modernizing Medi-Cal eligibility rules to make access easier for older adults and people with disabilities. In 2024, the state eliminated asset limits altogether, allowing many to qualify based solely on income.

However, beginning January 1, 2026, California will reinstate an asset-based test for many non-MAGI Medi-Cal programs — meaning your savings, investments, and property could once again affect your eligibility.

1. A Brief History of Medi-Cal Asset Rules

Year	Change	Key Impact
Pre-2022	$2,000 individual limit ($3,000 for couples)	Strict cap prevented many middle-income seniors from qualifying.
2022	Raised to $130,000 per individual	Significant expansion; allowed greater savings.
2024	Asset limit eliminated statewide	Eligibility based on income only.
2026 (planned)	Asset test returns	Limits reintroduced at higher thresholds (still pending DHCS finalization).

These changes stem from California’s AB 133 and AB 118 reforms, later modified by the 2025–26 Budget Act and DHCS All County Welfare Directors Letter (ACWDL 25-14).

2. What the 2026 Reinstatement Means

Starting January 1, 2026, Medi-Cal applicants and beneficiaries in non-MAGI programs will again need to disclose countable assets.

Expected limits (subject to DHCS confirmation):

• $130,000 for an individual

• $195,000 for a couple

• + $65,000 for each additional household member

This includes older adults, people with disabilities, and those seeking long-term care or nursing-home Medi-Cal.

MAGI-based categories — such as Medi-Cal for children, pregnant women, and expansion adults under age 65 — remain income-based only.

3. What Counts as a “Countable Asset”?

Countable assets are resources that can be easily converted to cash, including:

• Checking and savings accounts

• Certificates of deposit (CDs)

• Investment and brokerage accounts

• Vacation homes or second properties

• Cash value of life insurance (above certain limits)

• Non-retirement annuities or bonds

Exempt (non-countable) assets include:

• Primary residence, if the applicant or certain relatives live there

• One vehicle, regardless of value

• Household goods and personal effects

• Burial plots and prepaid burial plans

• Retirement accounts in payout status (401(k), IRA, etc.)

• Term life insurance policies (no cash value)

⚖️ Tip: Ownership structure matters. Assets held in a revocable living trust are still countable for Medi-Cal eligibility purposes because the grantor retains control. Only irrevocable trusts may be excluded, depending on terms.

4. Timing: How and When This Will Apply

• New applicants (after Jan 1 2026): Must meet the asset test at the time of application.

• Existing beneficiaries: Will be reviewed at their next annual renewal or when reporting a “change in circumstances.”

• Asset verification: DHCS and county welfare offices will likely use electronic cross-checks (bank and property records).

Applicants should prepare for a transition period with new verification forms and documentation requirements.

5. Estate Planning Implications

Reinstating the asset test reintroduces classic Medi-Cal planning challenges:

✅Do:

• Keep clear records of exempt vs. countable property.

• Review the title of real property and beneficiary designations.

• Consider irrevocable Medi-Cal planning trusts or special needs trusts if long-term care is expected.

• Consult an estate-planning attorney before transferring assets, as gifting can trigger look-back penalties.

🚫 Avoid:

• Rapid transfers or “spend-downs” without professional advice.

• Moving property into a revocable trust expecting protection — Medi-Cal still counts it as yours.

• Failing to update estate documents created under 2024–25 “no asset limit” rules.

6. Interaction with Medi-Cal Estate Recovery

Even though Medi-Cal eligibility will again consider assets, estate recovery rules still apply separately.

Under federal law and California Welfare & Institutions Code § 14009.5:

• Recovery applies to benefits paid for those aged 55 or older, or permanently institutionalized individuals.

• DHCS may seek reimbursement only from assets subject to probate — so a properly funded revocable living trust can still reduce exposure.

🏠 Example: A home titled in a living trust may avoid probate recovery, even though it was countable for eligibility purposes.

7. Planning Strategies for 2025–2026

To prepare before the new limits take effect:

1. Review your estate plan and trust funding by mid-2025.

2. Inventory assets and categorize them as countable or exempt.

3. Consolidate small accounts to simplify documentation.

4. Discuss long-term care insurance as part of a blended strategy.

5. Work with a qualified attorney for Medi-Cal and trust planning.

Conclusion

California’s reinstatement of an asset test for Medi-Cal marks a significant policy shift. While limits will be far more generous than in the past, they still create new planning requirements for seniors and disabled individuals seeking coverage in 2026 and beyond.

At Moravec, Varga & Mooney, we help clients navigate these changing Medi-Cal rules — ensuring trusts, estates, and beneficiary plans remain compliant while protecting family assets.

📞 Call us today to schedule a confidential consultation on Medi-Cal planning, trust funding, or long-term care eligibility under California law.