Medi-Cal Spend Down in California: What the Rules Actually Mean

Spending down means using savings above Medi-Cal's long-term-care asset limit on things the person needs, such as medical bills or debts, until countable assets reach the limit. It is separate from share of cost, which is about monthly income. Gifts are different: California looks back 30 months before entry into a nursing facility, and only transfers made on or after January 1, 2026 count.

Most people facing this question are a daughter, a son or a husband or wife watching a parent or partner move toward a nursing home, and doing quiet arithmetic about how long the savings will last. Someone has used the phrase "spend down," and it sounds like being told to burn through a lifetime of careful saving. The worry underneath is usually concrete: whether the house is safe, what the spouse at home keeps, and whether a gift made last year will cause trouble.

This page explains what spend down means under California's Medi-Cal program, how the asset rules, the look-back, share of cost, spousal protections and estate recovery fit together, and where federal law sets the outer frame.

A note on figures. Several of the numbers involved, including income standards, allowances and the spousal figures, are set or adjusted by California and change over time. Where this page does not give a California figure, it is because that figure depends on California's current rules, and the DHCS pages are the live source for it.

What 'Spend Down' Means Under Medi-Cal

Medi-Cal is California's name for Medicaid, the joint federal and state program that pays for long-term care. It is not Medicare, which is a different program this page does not cover.

California uses two separate mechanisms that both get called "spend down," and they are easy to confuse. This page covers both but keeps them apart.

The first is asset spend-down. A countable asset is property Medi-Cal counts when it decides eligibility, such as bank accounts or a second home, as opposed to exempt property it leaves out. When countable assets are above the limit, they have to come down to the limit before Medi-Cal pays for long-term care.

The second is share of cost. In California, share of cost concerns monthly income and is different from spending down assets to the asset limit.

According to the California Department of Health Care Services (DHCS) Asset Limit Frequently Asked Questions, Medi-Cal counts assets for many applicants, who share information about what they own when they apply or renew. For someone who may need long-term care, that page says plainly that assets must be spent down. That long-term-care setting is the focus here.

The Asset Limit for Long-Term Care Medi-Cal and What Counts

The DHCS asset limit page says Medi-Cal started counting assets on January 1, 2026 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. It states an asset limit, the most a person can own in countable assets and still qualify, of $130,000 for one person through June 30, 2027, plus $65,000 for every extra person in the household, up to 10 people. Starting July 1, 2027, the limit is $21,000 for one person and $31,000 for two people, plus $1,550 for every extra person, up to 10 people. A fuller breakdown is on this site's page on California Medi-Cal asset limits.

DHCS lists what it does not count, including the main home where a person lives and the main vehicle. Second homes and second vehicles count. For someone in a nursing home, DHCS says the home does not count against the person if they own it and plan to return to it. DHCS also says the home does not count if a spouse or partner lives there or a dependent relative lives there. Extra homes count.

"Not counted" has a limit for long-term care. Federal law at 42 U.S.C. § 1396p(f) bars long-term-care coverage for a person whose home equity is above a set limit, unless a spouse, a child under 21 or a blind or disabled child lives in the home. The figure that applies in California depends on California's current rules.

For a married applicant, the spouse at home is called the community spouse. DHCS notes some couples may qualify for higher limits under the spousal impoverishment rules, which federal law sets out at 42 U.S.C. § 1396r-5. Those protections are covered further below.

How Asset Spend-Down Works: What Qualifies and What Doesn't

Spending down is not the same as giving money away. DHCS describes spend-down as using money on things a person needs, giving examples that include paying medical bills and paying off a car loan or other debts. DHCS's list also includes buying clothes or household items, paying rent or mortgage, paying for school and fixing the home; whether a given purchase is treated as fair value turns on the facts. This site's page on Medicaid spend-down walks through these uses further.

Gifts are where the look-back comes in. A look-back period is a window of time before a set date during which Medi-Cal reviews transfers of assets for less than their value. DHCS states that if a person 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; transfers made on or after January 1, 2026 may cause a penalty that delays coverage.

That 30-month window is California's. Federal law sets a 60-month look-back for transfers made on or after February 8, 2006 (42 U.S.C. § 1396p(c)(1)(B)(i)), and states differ, so no single look-back applies everywhere.

A penalty period is a stretch of time when Medi-Cal will not pay for long-term care because of an uncompensated transfer. Under 42 U.S.C. § 1396p(c)(1)(D)(ii), it starts on the later of the month of the transfer and the date the person is eligible and would otherwise be receiving institutional-level care. In practice, that means the clock usually starts when the person already needs and qualifies for care, so a gift made early in the look-back is penalized the same way as a recent one.

Not every transfer is penalized. The law carves out some transfers, including a home whose title went to the person's spouse (42 U.S.C. § 1396p(c)(2)(A)(i)), and a transfer to the person's spouse carries no transfer penalty (42 U.S.C. § 1396p(c)(2)(B)(i)). Other exceptions exist, and whether one fits turns on the facts.

Share of Cost: The Monthly Income Spend-Down

Where asset spend-down asks what a person owns, share of cost asks what a person receives each month.

The federal framework appears on the Centers for Medicare & Medicaid Services Eligibility Policy page. States may run a "medically needy" program for people whose income is too high to qualify otherwise. Those people can become eligible by "spending down" the income above the state's medically needy income standard, by incurring medical and remedial care expenses their insurance does not cover. Once those expenses exceed the gap between income and the standard, the person can be eligible, and Medicaid pays the costs beyond that amount.

In Medi-Cal, that monthly gap is the share of cost. California's income standard and its list of expenses that count depend on California's current rules.

For someone already eligible and living in a nursing home, a different calculation applies. The CMS Spousal Impoverishment page describes the post-eligibility calculation: the resident's total income, less protected amounts including a personal needs allowance of at least $30, an allowance for a community spouse where the spousal rules apply, a family allowance where other family members live in the household, and the resident's own incurred medical expenses. What remains goes toward the cost of care.

Spousal Protections Under California's Medi-Cal Rules

Federal law at 42 U.S.C. § 1396r-5 sets the spousal impoverishment rules. The institutionalized spouse is the one receiving long-term care; the community spouse is the one still at home. When the application is made, the statute treats the resources of either spouse, or both, as available to the institutionalized spouse, except to the extent of a protected amount. Put simply, Medi-Cal looks at what the couple owns together, not just what is in the name of the spouse needing care, but it sets aside a portion for the spouse at home.

That protected amount is the Community Spouse Resource Allowance (CSRA): the share of the couple's combined countable assets the community spouse may keep. CMS's April 27, 2026 bulletin explains that the federal minimum and maximum resource allowances adjust each January, with its chart effective January 1, 2026 unless otherwise noted. California's CSRA figure and the date it applies from depend on California's current rules.

The Minimum Monthly Maintenance Needs Allowance (MMMNA) is the minimum monthly income the community spouse is entitled to keep. Federally, the same bulletin says the MMMNA adjusts each July 1, while the maximum income allowance adjusts each January. When the community spouse's own income falls short, part of the institutionalized spouse's income can be set aside for the community spouse, as long as it is actually made available. In other words, the spouse at home is not expected to live on too little while the other spouse's income goes to the nursing home.

Once eligibility is established, the statute says no resources of the community spouse are deemed available to the institutionalized spouse. That means what the spouse at home owns after approval is generally treated as theirs. Whether California allows spousal refusal, where the at-home spouse declines to make assets available, is a question of California's current rules.

Estate Recovery: What Happens After Medi-Cal Pays

Estate recovery is the process by which a state seeks repayment, from a deceased member's estate, of certain benefits it paid. The CMS Estate Recovery page states that 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.

In California, for members who died on or after January 1, 2017, the California Department of Health Care Services limits recovery to estate assets subject to probate. How assets pass at death, and whether they go through probate, therefore matters.

Federal law delays recovery, rather than cancelling it, until after a surviving spouse has died and while, among other conditions, a child under 21 or a blind or disabled child survives (42 U.S.C. § 1396p(b)(2)). For a family, that means recovery generally waits while those relatives are living. States must also set up procedures for waiving recovery when it would cause undue hardship (42 U.S.C. § 1396p(b)(3)), and California decides how its hardship waivers work.

The home deserves its own sentence. A home that was not counted during the member's life is not automatically protected after death; if it is part of the probate estate, it can be subject to recovery depending on how title is held. The CMS page also notes states may place liens on real property of a permanently institutionalized member in some circumstances, with exceptions when certain relatives live there. This site's page on Medicaid crisis planning covers recovery in more depth.

Planning Tools the Rules Allow

For a family weighing options, it helps to know which categories the law itself addresses. Each turns on the facts, and none is described here as a fit for any particular family.

Spending on things the person needs. Paying medical bills, paying off debts and the other uses on DHCS's list are spend-down uses, as described above.

Transfers to a spouse. A transfer to the person's spouse carries no transfer penalty under 42 U.S.C. § 1396p(c)(2)(B)(i). Moving assets between spouses does not shrink what the couple owns together, though, so the combined resources are still assessed under the spousal rules.

Annuities. Under 42 U.S.C. § 1396p(c)(1)(G), an annuity bought for an applicant counts as an asset for transfer purposes unless it is a listed retirement-account annuity or bought with listed retirement funds, or it is irrevocable and nonassignable, actuarially sound under Social Security Administration actuarial publications, and pays equal amounts with no deferral and no balloon payments. Separately, the purchase of an annuity is treated as a transfer for less than fair market value unless the State is named as a remainder beneficiary in the position the statute describes (42 U.S.C. § 1396p(c)(1)(F)).

Trusts. CMS notes that a trust funded with at least some of a person's money by the person, a spouse or someone acting for them can be considered available when deciding eligibility. Some irrevocable trusts are treated differently, but a trust does not always protect assets.

Statutory exceptions. The transfer-penalty exceptions in 42 U.S.C. § 1396p(c)(2), including home transfers to a spouse, apply only as the statute states them. A transfer that comes close to an exception but does not match it is treated like any other transfer.

DHCS says applicants share information about what they own when they apply or renew. Whether any of these applies depends on the specific facts and California's current rules; this site's page on a Medicaid planning attorney describes the questions involved.

Requesting a Consultation

Spend down rarely turns on a single rule. The asset limit, the date of every transfer, whether a spouse is at home, how the house is titled and what will pass through probate all interact, and the answer for one family can differ sharply from the answer for another. This page does not cover Medicare, private long-term-care insurance or veterans' benefits.

A consultation request about Medicaid and long-term-care planning can be made through Medicaid Asset Protection Group.