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Medi-Cal Options vs. Privately-Funded Care
As the costs of nursing homes and assisted living facilities in California continue to rise, planning for long-term care is essential. Many families turn to Medi-Cal for financial assistance, but qualifying can be complex, and it may not be the best solution for everyone.
In this article, we first cover key Medi-Cal eligibility rules, look-back periods, and estate recovery policies. We then explore private long-term care planning strategies for those who exceed Medi-Cal’s limits or prefer to preserve their assets for future generations.
How Does Medi-Cal Work for Long-Term Care and Who Can Apply?
Medi-Cal covers long-term care services in skilled nursing facilities and some assisted living programs for eligible individuals. Unlike Medicare, which only covers short-term rehabilitation, Medi-Cal helps pay for ongoing long-term care costs.
Even though California eliminated its Medi-Cal asset limits in 2024, applicants must meet certain income limits and provide financial documentation to qualify for long-term care benefits.
Income Limits for Medi-Cal Long-Term Care (2025)
For single applicants: Monthly income must generally be below $1,732
For married couples (both applying): The combined limit is $2,351 per month in 2025.
For married couples (one spouse applying for long-term care):
The spouse needing care must meet the Medi-Cal income limits.
The non-applicant spouse can keep up to $3,853/month
What Counts as Income?
Medi-Cal considers all sources of income, including:
Social Security benefits
Pensions
Rental income
Interest and dividends
Distributions from retirement accounts
If a retiree’s income exceeds the limits, they may still qualify for Medi-Cal’s Share of Cost (SOC) program, which requires them to contribute a portion of their income toward care before Medi-Cal covers the remaining expenses.
Understanding California’s 30-Month Look-Back Rule
Although California eliminated its Medi-Cal asset limit in 2024, the state still enforces a 30-month look-back period (shorter than the five-year look-back in many other states). This means Medi-Cal will review financial transactions within 30 months before applying to determine whether assets were given away or transferred below market value to qualify for benefits.
If Medi-Cal finds improper transfers, it can impose a penalty period, delaying eligibility for long-term care benefits.
Example: How the Look-Back Period Affects Eligibility
In January 2023, Greg gifted $75,000 to his daughter. In April 2025, he applies for Medi-Cal to cover his nursing home costs. Since this gift falls within California’s 30-month look-back period, Medi-Cal will impose a penalty period during which Greg will be ineligible for long-term care benefits.
Penalty Calculation:
To calculate the penalty period, Medi-Cal divides the transferred amount by California’s Average Private Pay Rate (APPR) for nursing home care.
Latest APPR (2025)*: $13,656 per month.
Penalty Period for Greg: $75,000 ÷ $13,656 = 5.49 months (rounded down to 5 months).
This means Greg will have to pay out-of-pocket for his care for five months before Medi-Cal coverage begins.
* Note: The APPR is updated annually, so for the most accurate calculation, it's advisable to consult the latest figures from the California Department of Health Care Services.
Is Your Home at Risk?
A primary residence is generally exempt from Medi-Cal’s asset rules if you or your spouse live in it or if you express intent to return home (even if you’re in a nursing facility). However, if the recipient of Medi-Cal benefits passes away, Medi-Cal’s Estate Recovery Program may attempt to recover costs by placing a claim against the estate.
Example: How Estate Recovery Works
Sarah, 82, lives alone and applies for Medi-Cal. Because her home is worth $500,000, she assumes it’s protected. While she qualifies for Medi-Cal, when she passes away, Medi-Cal files an estate recovery claim, potentially forcing her children to sell the home in order to cover the costs.
To help minimize the impact to your estate, consider:
Setting Up a Medi-Cal Asset Protection Trust (MAPT) - A Medi-Cal Asset Protection Trust (MAPT) transfers assets into an irrevocable trust before the look-back period applies. Assets in the trust are not counted for Medi-Cal eligibility or estate recovery.
Paying Off Your Mortgage Can Be a Strategic Alternative to Gifting Money - Since paying off a mortgage is considered a debt repayment, it does not trigger Medi-Cal penalties. However, gifting large sums of money to children within the look-back period may delay your eligibility.
California Partnership Long-Term Care Insurance - California’s Partnership Long-Term Care Insurance provides dollar-for-dollar asset protection. If a policy pays out $250,000, you can exclude $250,000 from Medi-Cal estate recovery.
Use Spousal Protections - If only one spouse applies for Medi-Cal, the Community Spouse Resource Allowance (CSRA) allows the non-applicant spouse to keep up to $154,140 in assets (as of 2024) without affecting eligibility.
Example: Ensuring Financial Stability for a Spouse
James enters a nursing home and applies for Medi-Cal. His wife, Ellen, remains at home and retains $150,000 in savings, allowing her financial security while James receives care.
While Medi-Cal provides essential coverage for those who qualify, many individuals find themselves in a difficult middle ground—earning too much to qualify but lacking the resources to cover long-term care costs out-of-pocket. In these cases, proactive planning is essential to protect your savings and ensure access to quality care.
Long-Term Care Planning for Those Who Exceed Medi-Cal’s Eligibility Limits
If you exceed Medi-Cal’s eligibility limits but do not have the financial resources to easily absorb long-term care costs, these expenses can quickly deplete your hard-earned savings. Additionally, some individuals—regardless of financial means—may wish to protect their estate and assets for their heirs rather than spend a significant portion on nursing home or assisted living costs.
The following strategies offer ways to manage long-term care expenses while protecting assets and financial stability:
1. ) Private Long-Term Care Insurance - For those who can afford it, long-term care insurance (LTCI) provides a way to cover nursing home, assisted living, and in-home care expenses without depleting personal wealth. Options include:
Traditional LTC policies, which provide set benefits for covered care.
Hybrid LTC insurance, which combines life insurance with long-term care coverage.
California Partnership LTC Insurance, which protects assets from Medi-Cal estate recovery.
2. ) Self-Insuring for Long-Term Care
Individuals with significant liquid assets may opt to self-insure by setting aside dedicated investment funds for potential care costs. This approach involves:
Investing in tax-efficient vehicles like Roth IRAs, annuities, or health savings accounts (HSAs).
Keeping funds in low-volatility investments to avoid needing to sell assets in a downturn.
3. ) Using Medicaid-Compliant Annuities (MCAs)
For married couples, Medicaid-compliant annuities can help a healthy spouse keep excess assets while allowing the other spouse to qualify for Medi-Cal. These annuities:
Convert countable assets into an income stream for the healthy spouse.
Ensure that savings are not fully spent on nursing home costs.
4. ) Protecting Real Estate Assets
For those who own multiple properties, placing real estate into an irrevocable trust or using a life estate deed can help protect assets from future long-term care costs and estate recovery. This allows:
Continued family ownership of properties.
Asset transfer outside the Medi-Cal system.
Plan Ahead to Secure Quality Care and Protect Your Finances
At Aspire Planning Associates, we take a holistic approach to financial planning and investment management, helping clients navigate life transitions, including long-term care planning. Whether you're proactively preparing for the future or facing an unexpected need for care, our team provides customized strategies to help safeguard your financial well-being. Let’s create a plan tailored to your long-term care needs. Call (925) 938-2023 to schedule a consultation with an Aspire Planning Associates advisor today.
This article is for informational purposes only and should not be considered personalized financial, tax, or legal advice. Individual circumstances can vary, and readers are encouraged to consult with a qualified financial planner, tax professional, and estate or elder law attorney regarding their specific situation.
