California Medi-Cal Asset Limits Are Back: Why Planning Before a Nursing Home Crisis Matters

Everything you own - all of the assets you worked hard to build - can be lost if you are not aware of and prepared for the high cost of long-term care. California's current statewide Average Private Pay Rate for nursing-home care is $14,440 per month. That is $173,280 per year.

At that rate, most families can watch a lifetime of savings disappear with frightening speed. Bank accounts can be drained, investments may have to be sold, and the family home may be placed in jeopardy. The financial damage is often made worse because the family does not learn the rules until a parent or spouse is already in a nursing home and the bills have begun arriving.

Families are often told by nursing-home staff or social workers who are not trained in the complex Medi-Cal rules that they must “spend down” everything they own by paying the nursing home until they qualify for help. That is simply not true. Medi-Cal does have strict eligibility rules, but the law also provides legitimate planning opportunities. A knowledgeable elder-law attorney can often prepare a lawful plan designed to protect available assets, obtain Medi-Cal eligibility as soon as the rules permit, and reduce or eliminate the family’s exposure to Medi-Cal estate recovery under current law.

The earlier a family receives accurate advice, the more choices it usually has. Planning before a crisis can mean the difference between preserving a family’s security and unnecessarily paying tens or even hundreds of thousands of dollars to the nursing home.

Why the Other Ways of Paying Usually Fall Short

Paying privately. A family can use savings, investments, retirement withdrawals, or the proceeds from selling property. But private payment is not a solution to the cost problem - it is the cost problem. At $14,440 per month, even substantial savings may not last long.

Long-term-care insurance. A good policy can be valuable, but it must generally be purchased before the need for care arises. Policies may have waiting periods, daily benefit limits, inflation limits, or a maximum number of years they will pay. The benefit may cover only part of the bill, and many families do not have a policy at all.

Medicare and health insurance. Many people believe Medicare will pay for a long nursing-home stay. It generally will not. Medicare may cover qualifying short-term skilled nursing or rehabilitation care after a hospital stay, but it is not intended to pay indefinitely for custodial long-term care. Medicare Part A coverage is limited to no more than 100 days in a benefit period, and the patient may owe significant costs before that coverage ends. Most private health insurance also does not cover ongoing custodial nursing-home care.

Veterans benefits. Certain veterans or surviving spouses may qualify for benefits that help with care costs. However, eligibility is limited, the benefit may not cover the entire nursing-home bill, and it is not available to every family.

For many California families, Medi-Cal is the only program capable of paying the ongoing cost of a long nursing-home stay. But a successful plan must address two different problems: qualifying for benefits and protecting the family from estate recovery.

Problem One: Qualifying for Long-Term-Care Medi-Cal

California restored an asset test for certain Medi-Cal programs on January 1, 2026. These rules generally affect people whose eligibility is connected to age, disability, or the need for long-term care. Through June 30, 2027, the basic asset limits are:

Those numbers do not tell the whole story. Not everything a person owns is countable. Depending on the facts, a principal residence, one vehicle, household goods, certain retirement accounts, and other property may be excluded. Married couples may also have important protections under the spousal-impoverishment rules. A person may therefore own far more than the basic limit and still qualify if the assets are properly classified and the plan is properly structured.

This is why blindly paying the nursing home until the money is gone is so damaging. A proper Medi-Cal plan may involve identifying exempt property, paying legitimate debts and expenses, making permitted purchases, using protections available to a spouse, or repositioning assets in a manner allowed by law. The correct strategy depends on the person’s health, marital status, income, property, family circumstances, and estate-planning documents.

Important New Information: The Limits Change in July 2027

Earlier in the 2026 state budget process, the Governor proposed reducing the asset limits to the former levels of $2,000 for one person and $3,000 for a couple. That proposal caused understandable alarm. However, the Legislature continued working on the budget, and the final law adopted different limits and a later effective date.

The current $130,000 and $195,000 limits remain in effect through June 30, 2027. Beginning July 1, 2027, the basic asset limits are scheduled to decrease to:

The proposed $2,000 and $3,000 limits were not ultimately adopted. That is good news, but the July 2027 reduction is still severe. Families who wait until the lower limits take effect may have fewer choices and less time to act. This change makes advance planning more important, not less important.

Do not give away assets merely because you are worried about the new limits. Medi-Cal may review transfers made on or after January 1, 2026, when a person seeks long-term-care coverage. An improper gift can create a penalty period during which Medi-Cal will not pay for the nursing-home level of care. A rushed transfer can also create tax problems, loss of control, creditor exposure, or conflict among family members.

Problem Two: Medi-Cal Estate Recovery

Qualifying for Medi-Cal solves the immediate problem of paying the nursing home, but it does not automatically protect the family home after the recipient dies. Medi-Cal estate recovery is the process through which California may seek repayment for certain long-term-care benefits paid on behalf of a deceased recipient. The critical fact most families do not understand is that, under current California law, estate recovery is primarily a probate problem.

The Estate-Recovery Trap Is Probate

Since January 1, 2017, California Medi-Cal estate recovery has generally been limited to assets in the deceased recipient's probate estate. In plain English, the State ordinarily cannot recover against property that does not pass through probate. This means the key to preventing estate recovery is not merely getting the person qualified for Medi-Cal. The plan must also keep the family home and other appropriate assets out of probate.

For a single or widowed person, estate recovery may become an immediate concern at death. A home can be exempt while the person is alive and applying for Medi-Cal, yet still be exposed later if it remains in the person's name and must pass through probate. Families are often shocked to learn that an asset can be protected for eligibility purposes but still be placed at risk by the estate-recovery rules.

The Surviving-Spouse Trap

When an ill spouse who received Medi-Cal dies, the surviving spouse may believe that the estate-recovery issue ended with the death. Because DHCS does not pursue repayment when the deceased recipient leaves a surviving spouse, there may be no immediate claim. That silence can create a dangerous false sense of security.

The surviving spouse may receive an official Medi-Cal estate-recovery warning or other notice and ignore it because she does not understand the consequences of leaving the family home in her individual name, relying on a will, or failing to seek legal counsel. Since nothing may happen immediately, she may put the notice aside without realizing that her own estate plan can determine whether her children later face probate and an estate-recovery claim.

For many married couples, the practical estate-recovery danger arises after the surviving spouse dies. If the surviving spouse later receives Medi-Cal benefits and dies owning the home or other assets in her individual name, those assets may become part of her probate estate and may be exposed to recovery for benefits paid on her behalf. Her children may discover the problem only after her death, when it is too late for her to create and fund a living trust.

This is why a surviving spouse should seek advice from an attorney who understands both Medi-Cal and estate planning while she is alive and has legal capacity. A properly prepared and fully funded revocable living trust can keep the family home and other trust assets out of probate, prevent an avoidable estate-recovery problem, and protect the children from an unpleasant surprise after their surviving parent dies.

The Good News: Estate Recovery Is Often Avoidable

A will does not avoid probate. A will is essentially a set of instructions telling the probate court who should receive the property. When a home remains in the deceased owner's name and is to pass under a will, a probate proceeding is ordinarily required. Having no estate plan is not better: property left in the person's name may still require probate and will pass under California's intestacy laws rather than under the person's wishes.

A properly prepared and fully funded revocable living trust avoids probate for the assets placed in the trust. When the family home is correctly titled in the trust, it can pass to the beneficiaries without a probate proceeding. Because current California estate recovery is generally limited to the probate estate, keeping the home and other appropriate assets in the trust can prevent Medi-Cal from recovering against those assets.

The trust must be properly drafted and properly funded. Merely signing a trust and leaving the home in an individual name does not solve the problem. The Medi-Cal eligibility plan and the estate-recovery plan must also work together, because a living trust does not by itself make countable cash or investments exempt. An attorney who understands both sets of rules can often protect the available assets, obtain Medi-Cal eligibility as soon as the law permits, and arrange the estate plan so that the family avoids unnecessary probate and Medi-Cal estate recovery.

Your Estate-Planning Documents Must Give Someone the Power to Act

A long-term-care crisis is not only a financial emergency. It is also a legal-authority emergency. Someone may need to manage bank accounts, pay bills, deal with real estate, communicate with insurance companies, apply for Medi-Cal, sign facility documents, or reorganize assets. Being a spouse or adult child does not automatically give a person the legal authority to do all of those things.

A complete plan should ordinarily include a revocable living trust with appropriate disability and successor-trustee provisions, a durable financial power of attorney, and an advance health care directive. The documents should give the chosen decision-makers enough authority to respond to incapacity and long-term-care needs. Generic or outdated documents may not provide the powers needed when a crisis occurs.

Without adequate documents, the family may be forced to seek a conservatorship before it can manage property or implement a plan. That can add court supervision, attorney fees, delay, and emotional strain at the exact moment the family is already facing a $14,440 monthly nursing-home bill.

Pre-Planning Protects More Than Money

The worst time to learn the Medi-Cal rules is after capacity has been lost and the nursing home is demanding payment. Advance planning gives the family time to identify which assets are countable, determine whether the home and other property are properly titled, evaluate spousal protections, review potential transfer penalties, and make sure the estate-planning documents provide the authority needed to act.

Planning ahead also allows the person who earned the assets to participate in the decisions. It can preserve control, reduce family conflict, avoid unnecessary taxes, and prevent desperate last-minute transfers. Most importantly, it can keep the family from spending money that the law did not require them to lose.

Frequently Asked Questions

Do I have to spend everything I own before Medi-Cal will help pay for nursing-home care?

No. Medi-Cal has financial eligibility rules, but not every asset is countable and married couples may have additional protections. A lawful plan may use exempt-property rules, permitted purchases, debt payment, spousal protections, and other strategies allowed by California law. The correct plan depends on the facts and should be prepared before assets are transferred or spent.

What are California's Medi-Cal asset limits in 2026 and 2027?

Through June 30, 2027, the basic limit is $130,000 for one person and $195,000 for two people. Beginning July 1, 2027, the basic limits are scheduled to decrease to $21,000 for one person and $31,000 for two people, with an additional amount for larger households.

Can Medi-Cal take the family home after a recipient dies?

The home is not automatically taken. Under current California law, estate recovery is generally limited to assets in the deceased recipient's probate estate. A home that remains in the recipient's individual name may be exposed if probate is required, even when the home was exempt for eligibility purposes during life.

Does a will avoid Medi-Cal estate recovery?

No. A will directs property through probate; it does not avoid probate. Because current California estate recovery is generally limited to the probate estate, relying only on a will may leave the home exposed.

How can a revocable living trust help avoid estate recovery?

A properly prepared and fully funded revocable living trust can keep the family home and other trust assets out of probate. When the Medi-Cal plan and estate plan are coordinated, avoiding probate can also prevent recovery against those trust assets under current California law.

What should a surviving spouse do after the Medi-Cal recipient dies?

The surviving spouse should not assume the danger has passed or ignore an estate-recovery notice. The survivor should obtain legal advice, review how the home is titled, and prepare and fund a living trust while the survivor is alive and has legal capacity. Otherwise, the children may discover a probate and estate-recovery problem only after the survivor dies.

Plan Before the Crisis Begins

The return of the Medi-Cal asset test does not mean that every family should immediately spend or give away property. It means families should obtain accurate advice before the need for nursing-home care becomes an emergency. The rules are complicated, the limits are changing again on July 1, 2027, and a mistake can cost far more than the legal planning needed to avoid it.

Miller Home Protection Law helps California families prepare for disability, protect assets from unnecessary long-term-care expenses, qualify for Medi-Cal when appropriate, and address Medi-Cal estate recovery. Thoughtful planning cannot remove every risk, but it can preserve choices, protect the family home, and give the right people the legal tools to act when help is needed most.

About the Author

Russell C. Miller is a California attorney and the founder of Miller Home Protection Law in Visalia. His practice focuses on revocable living trusts, disability planning, nursing-home Medi-Cal planning, probate avoidance, and protecting the family home before a crisis. Call (559) 625-4205 or visit HomeProtectionLaw.com for more information.

Official Sources and Further Reading

• California Department of Health Care Services, ACWDL 26-03 - 2026 Statewide Average Private Pay Rate for Nursing Facility Services
• California Department of Health Care Services, Medi-Cal Changes - Asset Limits
• California Department of Health Care Services, Asset Limit Frequently Asked Questions
• California Legislative Information, Welfare and Institutions Code section 14009.5 - Medi-Cal Estate Recovery
• California Department of Health Care Services, Estate Recovery Program
• California Department of Health Care Services, DHCS 9060 - Important Notice Regarding the Medi-Cal Estate Recovery Program
• Medicare.gov, Skilled Nursing Facility Care
• Medicare.gov, How Can I Pay for Nursing Home Care?