Why Medi-Cal Planning Just Became More Urgent

For decades, Californians have relied on Medi-Cal as a safety net for long-term care. When personal savings, retirement income, or private insurance fall short, Medi-Cal often steps in to cover the costs of skilled nursing facilities, assisted living, or in-home support. But under the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, that safety net is tightening in ways many families never anticipated.

The New Reality: Stricter Asset Rules

The OBBBA slashed federal Medicaid funding, forcing California to balance its budget by reinstating strict asset tests for Medi-Cal eligibility. Applicants are now limited to $2,000–$130,000 in countable assets, depending on marital status and eligibility category. Countable assets may include:

• Retirement accounts (IRAs, 401(k)s, and annuities).
  
• Brokerage accounts and savings beyond minimal allowances.
  
• Multiple properties (anything beyond a primary residence).
  

This means that even families with what they consider “moderate” wealth—such as a small investment account or a second property—may no longer qualify.

Who’s at Risk?

• Middle-class families who own a home, a rental property, and modest retirement savings.
  
• Seniors who accumulated investments to support retirement, only to see those savings disqualify them.
  
• Adults under 65 who rely on Medicaid and may now face new work requirements to maintain coverage.
  

These families fall into a troubling “gap”: too wealthy to qualify for Medi-Cal, but without enough resources to self-fund years of long-term care.

Why You Can’t Wait Until Crisis Hits

Many families only consider Medi-Cal planning after a loved one receives a diagnosis or suddenly requires care. By then, options are limited. Transfers or trust funding made under pressure may trigger penalties, while property sales could result in lost value and unnecessary taxes.

Strategies to Consider Now

• Irrevocable trusts can protect assets while still allowing for Medi-Cal eligibility, provided they’re set up early.
  
• Spousal protection strategies can ensure one spouse continues to have financial security if the other requires care.
  
• Coordinating benefits with veterans’ aid or private insurance can stretch resources further.
  

The Takeaway

Medi-Cal planning just became more urgent than ever. Advisors and attorneys should encourage families to act now, not later, to ensure they’re protected.

Don’t wait for a health crisis. Review your long-term care plan today to safeguard assets and preserve eligibility for Medi-Cal benefits.