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.
Could Medi-Cal Help Pay for Your Long-Term Care?
One of the biggest concerns we hear from seniors and their families is, “How will I pay for long-term care if I need it?”
It is an understandable concern. The cost of care can add up quickly, whether you need assistance at home, assisted living, or skilled nursing care.
Fortunately, a major change to California’s Medi-Cal rules that took effect January 1, 2024, may make Medi-Cal benefits available to many more Californians who need long-term care.
California Eliminated the Medi-Cal Asset Test
Beginning January 1, 2024, California eliminated the asset test for Medi-Cal eligibility, including long-term care Medi-Cal.
This is a significant change.
In the past, assets such as a second home or rental property, financial accounts, investments, and other property could affect whether someone qualified for Medi-Cal. As of January 1, 2024, Medi-Cal no longer considers your assets when determining eligibility.
That means having substantial savings, investments, retirement accounts, or real estate does not, by itself, prevent you from qualifying for Medi-Cal.
What About Income?
While assets are no longer counted, income is still an important part of determining Medi-Cal eligibility and what you may have to contribute toward the cost of your care.
We often hear from people who have already decided that they will not qualify for Medi-Cal because their monthly income is too high.
Don’t make that assumption.
For someone receiving long-term care Medi-Cal, income may instead be calculated as part of the individual’s Share of Cost, which is the amount the individual contributes toward the cost of care before Medi-Cal pays its share.
For example, imagine a skilled nursing facility costs $18,000 per month and you have $4,000 in monthly income. Subject to the applicable Medi-Cal rules and allowances, your income may be applied toward your Share of Cost, with Medi-Cal paying the remaining covered cost.
This is why it is important to evaluate your individual circumstances rather than assuming your income automatically disqualifies you.
The High Cost of Long-Term Care
The need for long-term care can arise because of dementia, illness, injury, or simply the effects of aging. In addition to worrying about a loved one’s declining health and quality of life, families may suddenly find themselves facing another difficult question: How are we going to pay for this care?
Home care can be expensive, particularly as the number of hours of assistance increases. Assisted living can also cost thousands of dollars each month.
When someone’s care needs become greater than what can be provided at home or in assisted living, a skilled nursing facility may become necessary. That level of care can cost many thousands of dollars each month.
This is where Medi-Cal may provide an important resource.
Medi-Cal is California’s Medicaid program, and for those who qualify, it can help pay for skilled nursing care.
Could Someone with a Significant Estate Still Qualify?
Under the Medi-Cal rules that took effect January 1, 2024, yes, it is possible.
Imagine someone owns a $2 million home and has another $1 million in cash, investments, and retirement accounts. Having a $3 million estate does not, by itself, make that person ineligible for Medi-Cal because assets are no longer included in the eligibility determination.
Income is a separate consideration.
For example, suppose that person receives $2,500 per month in Social Security, $500 per month in investment income, and $36,000 annually in required minimum distributions from an IRA. That would amount to approximately $6,000 per month in income.
Rather than simply assuming that income makes the individual ineligible, it is important to determine how the Medi-Cal income and Share of Cost rules apply to that person’s particular situation.
What About Medi-Cal Estate Recovery?
There is another important part of Medi-Cal planning that families should understand: Medi-Cal estate recovery.
Although Medi-Cal may help pay for long-term care, California is required under certain circumstances to seek repayment after a Medi-Cal beneficiary dies.
For Medi-Cal beneficiaries who die on or after January 1, 2017, California generally limits estate recovery to assets in the deceased beneficiary’s probate estate. Recovery is also limited to certain Medi-Cal benefits, including nursing facility services, home and community-based services, and certain related hospital and prescription drug services.
This makes estate planning particularly important.
A Living Trust Can Be an Important Part of Medi-Cal Planning
Because California’s Medi-Cal estate recovery is generally limited to assets subject to probate, having a properly created and funded Living Trust can be an important part of an overall Medi-Cal planning strategy.
It is not enough simply to sign a Living Trust. Assets that should be owned by the Trust need to be properly funded into it.
Other assets, such as retirement accounts, cannot simply be retitled into a Living Trust, so appropriate beneficiary planning is also important.
The goal is not only to consider whether you qualify for Medi-Cal today, but also to consider what may happen to your estate after your death.
Planning Before a Crisis
Timing can be extremely important when it comes to Medi-Cal planning.
Ideally, families should explore their options before there is an emergency need for long-term care. This gives us an opportunity to look at the individual’s care needs, sources of income, potential Share of Cost, estate plan, and other circumstances.
It can also give families time to consider whether additional legal planning may be appropriate.
Every situation is different. The appropriate strategy for a married couple may be very different from the strategy for a single individual. Rental properties, retirement accounts, trusts, income-producing assets, and other circumstances can also require additional planning.
Don’t Assume You Won’t Qualify for Medi-Cal
Perhaps the most important takeaway is this: Don’t disqualify yourself from Medi-Cal before learning whether you actually qualify.
We frequently encounter families who have researched Medicaid online and concluded that they have too many assets or too much income to qualify. Unfortunately, they may be reading outdated information or information about Medicaid programs in other states.
Medicaid rules vary significantly from state to state, and California’s Medi-Cal rules changed dramatically on January 1, 2024.
If you are concerned that you, your spouse, or a loved one may need long-term care now or in the future, we encourage you to learn about your options before a crisis occurs.
When you contact Litherland, Kennedy & Associates about Medi-Cal planning, you will have an opportunity to speak with our Geriatric Care Manager, Dedra Jize. Dedra has a wealth of information and can help families better understand their care needs and available resources.
If you have questions about Medi-Cal and long-term care planning, please call Litherland, Kennedy & Associates at (408) 356-9200.
Originally published March 21, 2024. This article reflects California Medi-Cal rules in effect as of that date. Medi-Cal laws and regulations are subject to change. This information is provided for educational purposes only and is not intended as legal advice.
- 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
