Q. You recently wrote an article advising that Governor Newsom was proposing a return to the former asset cap of $2,000 for those older individuals seeking to qualify for Medi-Cal. Has there been any decision on this?
A. Yes, indeed! And the news is not as bad as many of us feared. A little background may be helpful:
Back in 1965, during the term of Lyndon Johnson, Medicaid was created to provide health care and nursing home care to persons of modest means. Medicaid is the name most states give to what we call Medi-Cal in California. The law provided that, to qualify, an applicant could not have more than $2,000 in savings or other non-exempt assets. This low resource cap remained the rule throughout the country for more than 5 decades. Then, in July, 2022, and with a budget surplus, California –alone among the states – increased that long standing rule resource “cap” to $130,000 for an individual and $65,000 for each additional household member ( up to 10), and in 2024, the state eliminated the Medi-Cal asset cap entirely!
However, because of a current budget shortfall, Governor Newsom recently proposed a return to the decades old resource cap of $2,000 in order to curb the state’s expenditures for Medi-Cal. But, many legislators, as well as interest groups supporting Californians of modest means, pushed back. The Governor and legislators then negotiated a compromise agreement: rather than return to the original (and decades old ) $2,000 resource cap, they agreed to reinstate the more liberal $130,000 resource cap for an individual (plus $65,000 for each additional household member, up to 10), beginning next year in 2026. So, the good news for seniors needing Medi-Cal: the new resource cap will not be as bad as it might have been!
A few bullet points:
1) Even when the new resource cap of $130K takes effect, there are still legal and ethical planning options that may yet be available for those who are still over that cap, in order to reduce their resources to the new resource cap in order to qualify;
2) The resource cap only applies to Non-MAGI Medi-Cal beneficiaries (i.e. persons over age 65 or disabled and on Medicare), but not to younger individuals under age 65 on MAGI Medi-Cal, where income, namely “Modified Adjusted Gross Income” (“MAGI”), is the key requirement, and for whom assets are not considered at all, thanks to the Affordable Care Act signed into law by President Obama;
3) For those persons currently on Medi-Cal, the new resource cap will only affect them at either (a) the time of their annual renewal in 2026 , or (b) upon their reporting a change in circumstances in 2026; until then, their current eligibility continues;
4) Income received will count, if at all, toward Share of Cost (“Co-Pay”), as before;
5) For married couples or Registered Domestic Partners (“RDP’s”), if only one spouse needs Medi-Cal, the other spouse may be permitted to retain additional resources under what is termed the “Community Spouse Resource Allowance” under “Spousal Impoverishment” rules. That amount changes each year with inflation, and is expected to be at least $157,920 next year. So, a married couple or RDP’s could, together, then retain at least $130,000 + $157,920 = $287,920 in total non-exempt resources and still qualify one spouse for Medi-Cal;
6) The state has not yet issued rules about how transfer penalties will be applied, so be wary of gifting away assets in order to accelerate Medi-Cal eligibility;
7) The SSI rules will not change, so recipients who wish to preserve their SSI benefit must still keep their countable assets below $2,000 for an individual and $3,000 for a couple;
8) We anticipate more change once the full impact of the recent federal “Big Beautiful Bill” becomes effective, but we do not anticipate that those changes will be helpful to current and prospective Medi-Cal beneficiaries.
So, it is likely that new developments will be announced by Medi-Cal as we near the end of this year and the beginning of next year, so be alert and stay tuned.