Is A Medi-Cal Asset Protection Trust Right For You?

Americans are living longer, according to the Centers for Disease Control and Prevention.  As Americans age, they also require long-term healthcare. In the United States, Medicaid is a federal and state program providing middle to low income families with coverage for medical costs and nursing home care. In California, the state-specific Medicaid program is known as Medi-Cal. While, in theory, Medi-Cal seems like a great idea, Medi-Cal poses some significant financial challenges. In fact, many people who need Medi-Cal may discover that they do not qualify.

Additionally, the State of California may seek repayment of certain long-term care costs from your probate estate after your death through its Medi-Cal Estate Recovery Program. One way to address these issues is through a Medi-Cal Asset Protection Trust (MAPT). Many Californians may be uncertain as to whether a MAPT is right for them. If you have questions or concerns about a MAPT, consider contacting the experienced estate planning and elder law attorneys of Santa Barbara Estate Planning & Elder Law at (805) 946-1550 for guidance.

Understanding California Medi-Cal Asset Protection Trusts

A Medi-Cal Asset Protection Trust holds and manages people’s assets, including their primary residence, so that they are not counted for Medi-Cal eligibility and are not subject to Medi-Cal estate recovery. This type of legal document protects people’s assets from being lost to Medi-Cal, lawsuits, bankruptcy, and other complex legal situations. Additionally, a Medi-Cal Asset Protection Trust also protects people’s assets for their beneficiaries.

Limits on Medi-Cal Estate Recovery

For deaths on or after January 1, 2017, California law places several limits on Medi-Cal Estate Recovery’s capacity to claim assets after a recipient’s death, including:

• If a recipient is survived by a spouse or registered domestic partner, the state will not make a claim against the recipient’s estate.
• The state waives its claim against a home whose fair market value is 50 percent or less of the average home price in that county.
• If there is no probate estate, for example because all assets are held in a revocable or irrevocable trust or pass by survivorship or beneficiary designation, there is no Medi-Cal Estate Recovery.
• If the recipient has a surviving child who is under the age of 21, or a child of any age who is blind or disabled, then the estate may not be claimed.
• In California, Estate Recovery may only seek recovery for nursing facility services, home and community-based services, and related hospital and prescription drug costs, not other medical care.

It is important to note that while assets in a revocable trust are protected from Medi-Cal Estate Recovery, a revocable trust will not help you become eligible for Medi-Cal if you have too many countable assets for the program.  An irrevocable trust such as a MAPT can help you become eligible for Medi-Cal benefits in the month you are placed in a skilled nursing facility, or even months or years after placement in a skilled nursing facility. Since January 1, 2026, transfers to the trust must be planned around the 30-month look-back described below.

How A Medi-Cal Asset Protection Trust Can Protect You

For individuals who opt for a Medi-Cal Asset Protection Trust as part of their estate planning, there are several ways that the trust can protect these people and their families. This includes:

• It keeps a home transferred to the MAPT out of the probate estate, so the home is not subject to Medi-Cal estate recovery.
• It protects the house from any of the children’s creditors.
• Individuals have the option and legal right to stay in their residence as long as either spouse is alive.
• It avoids probate, meaning the house will go immediately to the designated beneficiaries without court involvement.
• It allows individuals to make MAPT assets non-countable so that children do not lose access to government benefits upon inheritance.
• Parents can specify specific terms and incentives for children’s use of the trust – such as for education, a career, or buying a home.
• Individuals can specify a Trust Protector to guard the MAPT, protect beneficiaries, and ensure that the deceased’s wishes are correctly carried out.

If you have questions about how and why a Medi-Cal Asset Protection Trust can help you and your family, it may be helpful to speak with the nationally recognized attorneys at Santa Barbara Estate Planning & Elder Law.

How a Medi-Cal Asset Protection Trust Can Make You Eligible for Medi-Cal

Income Limit:

California law has a fixed maintenance need standard for those who are living at home, i.e., the amount of monthly income the state has determined you need for necessary monthly expenses, not including medical bills. The need standard for a single elder (over 65) or disabled person is $600 per month; for an elder/disabled couple it is $934 per month, unless you qualify for the Aged & Disabled Federal Poverty Level Program, which covers monthly income up to $1,836 for one person or $2,499 for a couple as of April 1, 2026. Generally, if your monthly income is higher than the need standard, or above the aged
and disabled level, you will have a “share of cost” for your medical bills each month. Once you pay or agree to pay your monthly “share of cost” towards your medical bills or skilled nursing home care, you will receive Medi-Cal benefits to pay for covered services you receive in that month.

The share of cost works much like an insurance deductible and is determined by the Medi-Cal office. The amount of the share of cost is equal to the difference between your gross monthly income, minus deductions, such as insurance premiums (Medicare and/or private insurance), and the need standard. In a nursing home the calculation is different: nearly all of the resident’s income goes to the facility, less health insurance premiums and a $35 monthly personal needs allowance.

Asset Limit:

Medi-Cal classifies property as “exempt” and “non-exempt.” Exempt property is not counted in determining eligibility; non-exempt property is counted. Since January 1, 2026, a single applicant can keep up to $130,000 in non-exempt property. For a married couple in 2026, the at-home spouse can keep up to $162,660 and the institutionalized spouse up to $130,000. The $130,000 limit is scheduled to drop to $21,000 on July 1, 2027.  Where a married couple or individual has more than the resource or asset limit, they can turn to a Medi-Cal Asset Protection Trust to make themselves eligible for Medi-Cal.  In this scenario, the trust must be irrevocable to be exempt from Medi-Cal’s asset limit. This means that once the assets are transferred to the trust, they no longer belong to the person creating the trust, and that person cannot regain ownership.

Additional Medi-Cal Asset Protection Trust Factors

While there are multiple advantages to Medi-Cal Asset Protection Trusts, there are important factors to consider when creating one. These include:

• California has a 30-month look-back period for nursing home Medi-Cal. The county reviews assets given away, or sold for less than they are worth, in the 30 months before the application or admission. Transfers made before January 1, 2026 are not counted. A transfer made on or after that date can delay nursing home coverage by one month for each $14,440 transferred (the 2026 rate), up to 30 months.
• If transfers or gifts are made properly, a person may become eligible in the same month he or she is placed in a skilled nursing facility, or, if he or she has already been there for months or years, in the month the application is made.
• It can be expensive to create a Medi-Cal Asset Protection Trust. For this reason, they are typically not used for assets valued under $100,000. However, visiting with an experienced attorney can help you better understand if this would impact your specific situation.

Why You Should Consider Visiting With an Estate Planning Attorney

It is critical to consider working with an estate planning attorney when establishing a Medi-Cal Asset Protection Trust. An experienced attorney can help you navigate the legalities associated with a MAPT and work to ensure that the Trust is set up correctly so that you are eligible for Medi-Cal and your hard-earned assets are protected from the high cost of long-term care, so that they can provide for a spouse living at home or pass to your children or other beneficiaries. If you are considering establishing a MAPT, the attorneys at Santa Barbara Estate Planning & Elder Law may be able to help. Contact them for a consultation at (805) 946-1550.