Written by attorney Joseph Bernard McHugh Jr.

An Overview and Guideline of California Medi-Cal



Medi-Cal is the Federal Medicaid Program as implemented by the State of California through California’s Department of Health Care Services. It is a partnership between the federal government and California.

Medi-Cal is a “Public Need" Program, meaning that a person is not entitled to its benefits; they must qualify for eligibility by meeting certain asset limits, with a kind of income component that needs to be understood.


An individual applicant for Medi-Cal must have less than $2,000 of “Non-Exempt" assets. If the applicant is married, there is also a limitation on the non-applicant spouse. The non-exempt spouse is known as the “Community Spouse". The Community Spouse must have less than $115,920 of non-exempt assets. This is known as the Community Spouse Resource Allowance (CSRA).

Non-Exempt Assets:

Basically, Non-Exempt Assets are assets that are available to be used to pay for your care. These assets include:


•Investment Accounts

•Promissory Notes

•Non-Resident Real Property

•Insurance Policy Cash Values

Exempt Assets:

So, what are “Exempt" assets that are not factored in to the asset eligibility factors above? A general list would be:

•Your Residence (currently of any value)


•Personal Effects / Household Goods


•Term Life Insurance Policies

•Prepaid Funeral Arrangements / Burial Plots

•Medi-Cal Qualified Annuities

There are other assets that are not considered to be Exempt, but are simply “Unavailable". While not an exhaustive list, the following are considered unavailable":

•Fractional Interest in a Corporation or Limited Liability Company

•Joint Tenant Interest in Real Property

•Interest in an Operating Business

•Other Assets that are difficult to sell (but you must be actively trying to sell it)


When applying for Medi-Cal, you will be required to disclose and transfer by the applicant to a non-spouse for less than fair market value, within the last 30 months. Medi-Cal will then take each individual disclosed transfer and divide it by the Average Private Pay Rate (APPR) of $7,549. The product of this division will be the number of months of ineligibility from Medi-Cal benefits. Medi-Cal does round down the product. It is possible, under current Medi-Cal law, to be able to gift assets in increments that will not cause a transfer penalty. This is called “Stacked Gifting". However, this is something for which you should consult an experienced elder law attorney


As to the Applicant’s Income, Medi-Cal considers the “Name on the Check Rule", meaning that if the Applicant receives social security, pension, IRA distributions, etc., Medi-Cal will deem this income to pay for the Applicant’s care as their “Share of Cost". Share of Cost is calculated by taking total income, less $35 that the Applicant can keep as a Personal Needs Allowance. Share of Cost is further reduced by any premiums paid for supplemental insurance; dependant care; and to keep the spouse from being impoverished.

A well spouse may have up to $2,898 of the joint income. This is known as the Minimum Monthly Maintenance Needs Allowance (MMMNA). The well spouse’s income is looked first to satisfy this requirement, but if the Applicant’s income is needed then the needed amount up to this limit is allowed to be kept by the well spouse.

If the applicant’s income is needed in excess of the MMMNA, it is possible to either request a Fair Hearing though Medi-Cal, or go to court and get a court order to increase this amount. It will be required to show that the increase is needed to keep the well spouse from not being able to maintain their current needs.


In 2005, Congress enacted the Deficit Reduction Act (“DRA"), implemented in 2006. In this Act, there are major changes to the federal Medicaid program, especially to the eligibility and recovery provisions. However, each State must adopt all or a part of the DRA. To date, California has not adopted the DRA, but is preparing to do so. Legislation to do this is currently in State committees and is expected to be made law within the next year.

There will be significant changes, such as:

•Lookback Period increased from 30 months to 60 months

•Gifting: Currently the penalty clock on the transfer of an asset starts when the gift was given. Under the new law, the penalty will not start until an application if filed.

•Stacked Gifting will be eliminated.

•Medi-Cal will no longer round down.

•The current process of taking each transfer and dividing the transfer by the APPR will be changed to now group all transfers cumulatively.

•While your residence is still Exempt, it is only exempt to an equity limit of $750,000

If you have any questions or comments, let us know at [email protected]

Additional resources provided by the author

California Advocacy for Nursing Home Reform (

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