Medi-Cal and Your Home in California: What the Rules Actually Say

When a parent or spouse in California needs nursing-home care, Medi-Cal generally does not count the main home against eligibility if the owner lives there or plans to return. A federal home-equity cap can still apply when no spouse or qualifying child lives there. After death, California's estate recovery can reach the home if it passes through probate.

Families facing this question may be carrying two worries at once: a parent or husband who needs more care than the family can give at home, and a house that may be the only real savings the family has. The questions are usually blunt. Will Medi-Cal make Mom sell the house to qualify? Will the state take it after she dies? Can she still sign it over to the kids? Each question is governed by a different rule that applies at a different time, and much of the confusion comes from blending them.

This page takes those rules in the order a family usually meets them: eligibility, the home-equity cap, life while on Medi-Cal, estate recovery, transfers, share of cost and planning.

The Short Answer: When Your Home Counts and When It Does Not

Medi-Cal sorts what a person owns into two groups. A countable asset is one Medi-Cal adds up and measures against its asset limit. An exempt asset is one it does not count toward that limit. The California Department of Health Care Services (DHCS) lists "Your main home (where you live)" as not counted, and second homes as counted, on its Asset Limit Frequently Asked Questions page. The same page says that if you own your home and plan to return to it, it won't count against you, but any extra homes will count.

That makes the family home, in most cases, an exempt asset for the asset limit while the applicant lives in it or intends to go back. The federal home-equity limit described below is a separate rule that can apply even to a home that is exempt for the asset limit.

Who lives in the home also matters. Federal law protects the home from the home-equity cap, covered in the next section, when the applicant's spouse, a child under 21, or a blind or disabled child lives in it. The spouse who stays at home while the other receives nursing-home or similar care is called the community spouse, and this page uses that term from here on. Institutional care here means nursing-facility care or a comparable level of care.

This page covers Medi-Cal, California's Medicaid program, for long-term care. It does not cover Medicare, private long-term-care insurance or veterans' benefits.

The Home-Equity Limit: When a High-Value Home Can Block Eligibility

Federal law sets a ceiling on home value for long-term-care coverage. Under 42 U.S.C. § 1396p(f), a person "shall not be eligible" for nursing-facility or other long-term-care services if their equity interest in the home exceeds $500,000. A state may elect a higher figure that does not exceed $750,000, and the statute increases both figures from year to year, beginning with 2011, based on the consumer price index, rounded to the nearest $1,000. So the original dollar numbers in the statute are not today's numbers.

Home equity means the home's fair-market value minus any mortgage or other liens against it.

California's current home-equity figure, and the date it applies from, depend on current DHCS rules.

The cap has a clear exception. It does not apply if the applicant's spouse, child under 21, or blind or disabled child is lawfully living in the home. In that situation, a home above the limit does not by itself block eligibility. The statute also says nothing in this rule prevents using a reverse mortgage or home-equity loan to reduce equity, and it requires a process for waiving the cap in cases of demonstrated hardship.

For a married applicant whose spouse still lives in the house, the cap does not apply while the spouse lives there.

What Happens to the Home While You Are Receiving Medi-Cal

DHCS states that if you own your home and plan to return to it, it won't count against you, which is how a home can stay exempt after a move into a nursing facility. A parent who enters a facility and plans to return home generally does not lose the exemption simply by leaving the house.

For a married couple, the home is usually where the community spouse goes on living, and the home-equity cap does not apply while the spouse lives there. Federal spousal impoverishment rules, described on the CMS Spousal Impoverishment page, protect a share of a couple's combined resources and, in some cases, income for the spouse at home. DHCS notes that some married couples may qualify for higher asset limits and points them to the county Medi-Cal office about spousal impoverishment.

Transfers are another place the home can run into trouble. A look-back period is a window of time before a set date during which Medi-Cal reviews gifts and below-value sales. Under federal law, the look-back is 60 months for any transfer made on or after February 8, 2006 (42 U.S.C. § 1396p(c)(1)(B)(i)). California uses its own. DHCS states that when someone moves into a nursing home, Medi-Cal will look at assets given away in the 30 months before entering the facility. Transfers made before January 1, 2026 will not be counted, and transfers made on or after January 1, 2026 may cause a penalty that delays coverage.

A penalty period is the stretch of time when Medi-Cal will not pay for nursing-facility care and certain other long-term-care services because of a transfer for less than fair market value. A transfer to the applicant's spouse carries no transfer penalty under 42 U.S.C. § 1396p(c)(2)(B)(i). Other statutory exceptions are covered in the transfers section below.

California Estate Recovery: What the State Can Claim After Death

Estate recovery is the process by which a state seeks repayment, from a deceased member's estate, of certain Medicaid costs it paid. Federally, for people 55 or older, states must seek recovery for nursing facility services, home and community-based services, and related hospital and prescription drug services, as the CMS Estate Recovery page explains.

In California, DHCS states that for Medi-Cal members who died on or after January 1, 2017, recovery is limited to estate assets subject to probate. Probate is the court process for passing property that has no other built-in way of transferring at death.

That makes how the home is titled important. A home held in joint tenancy, in a living trust, or with a transfer-on-death deed may pass outside probate. Whether a particular home does depends on the deed, the trust documents and the facts at the time of death. Changing title can also count as a transfer for eligibility purposes, which is why the two questions are usually looked at together.

Federal law adds a timing rule. Estate recovery is delayed, not cancelled, while a surviving spouse, a child under 21, or a blind or disabled child of any age survives (42 U.S.C. § 1396p(b)(2)). States must also set up procedures for waiving recovery when it would cause undue hardship. California's hardship criteria depend on current DHCS rules.

CMS also notes that states may place liens on the real property of a living enrollee who is permanently institutionalized, except when a spouse, child under 21, blind or disabled child, or a sibling with an equity interest lives in the home.

The two rules work separately. The home being exempt when Mom applies says nothing, by itself, about whether California can recover from it after she dies.

Transfers of the Home: The Look-Back, Penalty Periods, and Exceptions

Giving the home away, or selling it for well under its value, inside California's look-back period can lead to a penalty period. As DHCS puts it, giving away assets for less than they're worth could delay long-term care coverage.

When the penalty starts matters as much as its length. Under 42 U.S.C. § 1396p(c)(1)(D)(ii), it begins on the later of the first day of the month of the transfer and the date the person is eligible for Medi-Cal and would otherwise be receiving institutional-level care but for the penalty. In practice, the clock does not start until the person would otherwise be eligible and receiving that care on an approved application, and it does not start during another penalty period. A gift made early in the look-back is penalized the same way as a recent one.

Federally, the length is the total uncompensated value of transfers divided by the average monthly cost to a private patient of nursing-facility care in the state (or, at the state's option, in the community where the person is institutionalized) at the time of application, and a state may not round down or otherwise disregard a fractional period. The divisor California uses depends on current DHCS rules.

The statute lists exceptions. For the home itself, no penalty applies to the extent title was transferred to:

• the applicant's spouse;
• a child under 21, or a child who is blind or permanently and totally disabled;
• a sibling with an equity interest in the home who lived there for at least one year immediately before the applicant entered an institution;
• a son or daughter who lived in the home for at least two years immediately before the applicant entered an institution and who, as the state determines, provided care that let the parent stay home rather than in a facility.

Other exceptions in the statute include transfers for the sole benefit of a spouse, certain trusts for a disabled child or a disabled person under 65, a satisfactory showing that the assets were transferred exclusively for a purpose other than to qualify for medical assistance, return of the asset, and an undue-hardship determination. Each turns on its own conditions.

Share of Cost Is Not the Same as Spending Down the Home

These two phrases answer different questions.

Share of cost is a monthly income concept. It is the part of each month's medical costs a Medi-Cal member pays before Medi-Cal covers the rest, based on how much income the person has. As CMS describes the medically needy approach on its Eligibility Policy page, the program then pays the cost of services beyond the expenses the person had to incur. California's share-of-cost amounts depend on current DHCS rules.

Spend-down, in the asset sense, means reducing countable assets to the asset limit. DHCS states that people who may need long-term care must spend down assets by using money on things they need, such as medical bills. For people who are 65 or older, have a disability, live in a nursing home or are in a family that makes too much money to qualify under federal tax rules, its page lists an asset limit through June 30, 2027 of $130,000 for one person, plus $65,000 for each extra person in the house, up to 10 people. Starting July 1, 2027, the page lists $21,000 for one person and $31,000 for two people, plus $1,550 for each extra person in the house, up to 10 people. The California Medi-Cal asset limits page covers which figure applies when.

Because the main home is generally exempt, it is not part of the spend-down. Spend-down reaches countable assets like savings and second homes. Share of cost reaches income. Neither one, on its own, requires selling an exempt home.

Planning Considerations: What the Rules Allow and What They Depend On

The rules treat the home differently depending on how it is arranged, including how it is titled, whether it is held in a trust, and whether a statutory transfer exception applies. Each tool carries its own conditions.

Trusts call for particular care. CMS explains that when a person, a spouse, or someone acting for them sets up a trust with at least some of the person's funds, the trust can be considered available to the person for eligibility. CMS also notes that money left in a trust after death may, under certain conditions, be used to reimburse Medicaid. A trust can affect probate and estate recovery and can also count as a transfer under the look-back. No trust or title change protects a home in every case.

The outcome turns on a set of facts:

• whether the applicant is married;
• who lives in the home;
• the home's equity;
• when any transfer happened and to whom;
• how the home is titled;
• the DHCS rules in effect at application and at death.

Families gathering those facts can read more on Medicaid crisis planning, the Medicaid spend-down process, and what a Medicaid planning attorney does.

This page explains what the rules say. It does not cover every planning scenario, and two families with similar houses can face very different results.

If You'd Like to Talk Through What Happens to the Home

The home is where eligibility, the look-back, title and estate recovery meet, and each of those rules depends on its own facts: how title is held, any trust, the dates and recipients of any transfers, who lives in the house, the care setting, and whether the owner is married.

To ask about a situation like this, request a consultation about your family's Medicaid and long-term-care options through Medicaid Asset Protection Group.