In this Vlog, Attorney Justin M. Kennedy discusses updates in the California Medi-Cal rules in 2024 and how those changes impact Medi-Cal Planning to pay for long-term care.
Transcript:
Hello, I’m attorney Justin M. Kennedy with Litherland, Kennedy and Associates, a California estate planning and elder care law firm.
Beginning January 1, 2024, Medi-Cal eligibility has removed the asset test for people over 65 years of age or are disabled (according to the state) or are blind. This is huge! What once used to disqualify a person from Medi-Cal benefits, such as having a second property (vacation home, rental, etc.), financial accounts adding up to over $130,000, some life insurance policies or annuities, these will no longer result in Medi-Cal disqualification.
You are probably wondering, “what is Medi-Cal eligibility based on” now? It is based on an income test. And what our office often hears from people is that they have already pre-determined that they will not qualify because they have income in excess of $2,000. But this is absolutely not true. The reason for this is because your income will be calculated as the monthly Share of Cost.
Your income will only disqualify you from Medi-Cal if your income is higher than the cost of the Skilled Nursing Facility. For example, if the skilled nursing facility charges $18,000 per month and your income is $19,000, then Medi-Cal will not help with the cost because your income can already pay that full cost.
Let’s change the example, now imagine that your income is $4,000 per month, then your cost for the care at the Skilled Nursing facility will be no more than that $4,000 each month and Medi-Cal would step in and pay the remaining amount.
We often hear from seniors who are worried about how they will pay for their future long term care if it becomes needed.
There is the stress of seeing yourself, your spouse, or a parent starting on a decline of function, whether it be due to dementia, ailments, injuries or aging. Their concern is about decreasing quality of life but even more so, about the financial ability to pay for care when needed.
Care at home can be expensive at over $50 an hour. If you were considering having a caregiver only part time, say 20 hours a week, the cost is approximately $4,000 a month. When care needs increase and there is a need for a caregiver 24 hours a day, then the cost for home care is over $35,000 a month.
A ‘less expensive’ option would be Assisted Living, at approximately $10,000 per month. What if you need more care than is available in Assisted Living, or if you cannot afford the cost of Assisted Living?
That is where a Skilled Nursing Facility maybe the answer, but a Skilled Nursing Facility costs around $500 per day, that’s $15,000 per month plus the cost of supplies and medications.
Clearly, if you could not afford Assisted Living, then you would not be able to pay for a Skilled Nursing Facility. But this is where Medi-Cal was created to help pay for Skilled Nursing Care.
You see, Medi-Cal, is the California implementation of the federal Medicaid system and it is there to help pay for the cost of a skilled nursing facility.
As of 2024, Medi-Cal has made itself more available to the aging population who have high care needs by eliminating the asset test.
Now the program only looks to your income which counts towards your share of cost.
For example, imagine you have a $2M home, and $1M in cash and investments and retirement accounts.
Your total estate is worth $3 million dollars. Guess what? You can still qualify to receive Medi-Cal benefits.
But what about the income test? Let’s look at that. Let’s say you have a Social Security income of $2,500 a month, your investments generate $500 of income a month and your annual required minimum distribution from your IRA is $36,000. In this example, your income would be $6,000 each month.
You would still be eligible to receive Medi-Cal as Medi-Cal would simply apply that $6,000 of income towards your Share of Cost and Medi-Cal would pay the difference. This means you get to keep your home, keep your investments and keep your IRA.
So what is the catch? This all sounds too good to be true, right? Well, once you are approved for Medi-Cal benefits, the Department of Health Care Services will keep track of all expenses that Medi-Cal pays on your behalf. These benefits are not a gift from the State of California and upon your death Medi-Cal will ask for every dollar back, this is known as Medi-Cal estate recovery. Medi-Cal would then put a lien on your home and other assets to make sure that they are fully repaid.
Is there anything you can do to avoid the Medi-Cal estate recovery, absolutely there is, you can create a Living Trust and make sure that your assets are properly funded into the name of that Living Trust. For the assets that cannot be titled in the name of the Living Trust, such as IRAs, you would need to list a beneficiary on the account – the Living Trust could be listed as the death beneficiary.
So long as you have protected your estate from probate, you have also protected it from the Medi-Cal estate recovery lien.
What if you want to keep some of your income, such as if you have a rental property. This is where it may be advisable to transfer the rental property into an Irrevocable Family Discretionary Trust where the property and the income it generates are no longer yours for Medi-Cal purposes. If the income is not yours, then it cannot count towards your Medi-Cal Share of Costs.
What is the next step?
If you are worried about yourself or you are worried that a loved one may need care now or in the future, please give our office a call to discuss your specific circumstances. It may be that Medi-Cal is the answer.
Unfortunately, many people do not realize that they could qualify for Medi-Cal. Many do online research where they read out of date information or information about how Medicaid works in other states (which is vastly different from how it works in California).
Timing is an important aspect of Medi-Cal planning; it is best if we can talk before the ‘emergency need’ for Medi-Cal arises. We will address the timing of an application, evaluate sources of income, and calculate the Share of Cost so that you know what to expect.
Most importantly, we will address any need for legal services, such as a Living Trust to protect your assets after you pass away.
Please give our office a call if you have any questions about Medi-Cal. When you call, you will get to talk with our office’s Geriatric Care Manager, Dedra Jize. Dedra has a wealth of information.
- Why Every Adult Needs a Health Care Power of Attorney - May 21, 2026
- Year-End Tax Planning Strategies for 2025 (VIDEO) - November 13, 2025
- Homeowner Insurance, Title Insurance, and Your Living Trust (VIDEO) - February 17, 2025
