Q: I just heard that Governor Newsom has proposed the reinstatement of the former asset test to qualify for Medi-Cal benefits. Is this true and, if so, what does this mean for seniors who might need long term care in the future? Is there anything we should do now to plan for this change?
A: Yes, you heard correctly. Just last week, in his proposed Budget Bill submitted to the Legislature, Governor Newsom proposed that California return to the decades-old “resource caps” necessary to qualify for Medi-Cal. Here is a summary excerpt from that proposal:
“Medi-Cal Asset Test Limits—Reinstatement of the Medi-Cal asset limit for seniors and disabled adults of $2,000 for an individual or $3,000 for a couple, effective no sooner than January 1, 2026. Estimated General Fund savings are $94 million in 2025-26, $540 million in 2026-27 and $791 million ongoing, inclusive of IHSS impacts.”
Of note is that this proposal both recognizes budget constraints in California and likely anticipates “cost-cutting” at the federal level, as the federal government pays roughly one-half of the cost. As I write this, the Congressional Budget Bill, which includes dramatic cut-backs to MediCaid (the name the rest of the country gives to what we call ‘Medi-Cal’) is still pending in Congress. While its status in its present form is presently uncertain, it would seem that – at least in part– our own Governor wishes to be pro-active in order to keep California on sound fiscal footing.
That said, the change, if implemented, would be dramatic for the disabled and seniors over age 65, i.e. the “traditional” Medi-Cal population. As many readers know, California fully abolished the “asset limit” for Medi-Cal eligibility for this group, effective in 2024, enabling many more senior and disabled Californians over the last year and a half to seek the medical care, facility care and in-home care they needed without bankrupting their families. The proposed changes would now be dramatic for these individuals and families. When I last checked, nursing homes in our area were charging as much as $19,000 per month for care on a private pay basis. And these changes would affect, not only seniors, but also the disabled of any age who need the care that Medi-Cal now subsidizes.
My advice to readers and their families is to anticipate the full implementation of these changes and take the following steps now:
1) Make sure that your estate planning documents are fully compliant with “time-tested” Medi-Cal planning strategies, long employed by Elder Law attorneys under the old rules. For example: these strategies would include express authorization to your trusted agent, to undertake what I call “strategic gifting” to trusted family members, if you were then incapacitated and could not do so yourself. Where appropriate, this strategy would help accelerate your own Medi-Cal eligibility, without spending away a lifetime of savings on your own care and potentially impoverishing your well spouse or other family members. Unfortunately, many estate plans that we have reviewed over time contain restrictions on “gifting”, which would undermine this strategy, and often those restrictions are written in “legalese” so that their full import is not apparent to the signers of these documents. Other strategies involve the use of specialized trusts, and Petitions to the Superior Court for Court Orders to facilitate Medi-Cal eligibility, among others.
2) Brace for the potential change in the law on or about January, 2026. For those currently on Medi-Cal, especially those in nursing facilities, this change and the probable need to re-qualify under the new rules could some as quite a shock. Be mindful of this potential change in the Medi-Cal rules and consider pro-active planning well before then.
3) Assess your own financial ability to meet the cost of long term care from your own, private savings and resources and, if you can qualify at reasonable cost, consider the purchase of long term care insurance. Unfortunately, the prospect of qualifying for reasonably priced policies diminishes as we age or our health changes, and so this option may not be suitable for everyone. Even if you can qualify, know that it is unlikely that such a policy will subsidize the full cost of care, still requiring the expenditure of your own savings to make up the difference.
4) For those readers now under age 65, and who presently qualify for Medi-Cal under the federal “Affordable Care Act” (the “ACA”) implemented during the term of President Obama, wherein eligibility is based only upon income, know that under present proposals your eligibility for Medi-Cal under ACA rules will cease when you reach age 65, unless you have strategies in place (such as the above) to continue Medi-Cal coverage under the then reinstated Medi-Cal asset limit change.
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Reference: Here’s a link to the full Budget Proposal, referred to as the “May Revision”. The Above excerpt appears on page 37:
https://ebudget.ca.gov/FullBudgetSummary.pdf
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Reference: Here is the State Assembly’s response, essentially rejecting the Governor’s proposal and instead reinstating the more moderate resource caps of $130,000 for an individual and $195,000 for a couple. See page 5 of the Assembly Budget Committee. Subcommittee Report, of June 9, 2025, at the following link:
https://abgt.assembly.ca.gov/system/files/2025-06/subcommittee-report-of-the-2025-26-budget.pdf