California Medi-Cal Estate Planning: Protecting Your Home from Estate Recovery

"Will Medi-Cal take my house?" is one of the most common questions California families ask when a parent needs long-term care. The short answer: it depends entirely on how the home is titled and whether it goes through probate.

Starting January 1, 2026, California has reintroduced strict asset limits for non-MAGI Medi-Cal programs — $130,000 for individuals and $195,000 for couples. This change makes estate recovery planning more important than it's been in years.

How Medi-Cal Estate Recovery Works in California

After a Medi-Cal recipient dies, the California Department of Health Care Services (DHCS) can seek reimbursement for medical benefits paid on the recipient's behalf. This is called estate recovery.

The critical detail: under California law (Senate Bill 833), Medi-Cal estate recovery is limited to assets that pass through probate. DHCS cannot recover against assets that transfer outside of probate — including property held in a revocable living trust, joint tenancy property, and assets with beneficiary designations.

This single rule makes the difference between losing the family home and keeping it.

Does Medi-Cal Take Your House?

It depends:

If the home is held in the deceased's individual name (or through a will): The home goes through probate, and DHCS can file a claim against the estate for the full cost of Medi-Cal benefits provided. For years of nursing home care, this claim can easily exceed $100,000-$300,000.

If the home is in a revocable living trust: The home bypasses probate, and DHCS has no mechanism to recover against it under current California law. The trust beneficiaries inherit the home free of the Medi-Cal claim.

If the home is held in joint tenancy: The home passes automatically to the surviving joint tenant at death, bypassing probate. No estate recovery.

If the home has a Transfer on Death deed: Same result — the property transfers outside probate and is not subject to estate recovery.

The 2026 Asset Limits

Before 2024, California had eliminated asset limits for most Medi-Cal eligibility categories (income-only qualification). Starting January 1, 2026, non-MAGI Medi-Cal programs have reimposed asset limits:

• Individual: $130,000 in countable assets
• Couple: $195,000 in countable assets

Your primary residence is generally exempt from the asset limit while you're alive (as long as you intend to return or a spouse still lives there). But after death, it's the estate recovery rules that determine whether DHCS can claim reimbursement.

Countable assets include bank accounts, investments, and non-exempt property. Exempt assets include the primary home (with equity up to the state limit), one vehicle, personal belongings, and irrevocable burial trusts.

Planning Strategies

Put the Home in a Revocable Living Trust

This is the most effective and straightforward strategy. Transfer the home to a revocable living trust while the Medi-Cal recipient is still alive and has capacity. The trust avoids probate, which blocks estate recovery.

Important: the trust must be a revocable living trust — not an irrevocable trust created specifically to hide assets from Medi-Cal. Medi-Cal's look-back rules treat transfers to irrevocable trusts as divestments, which can trigger a penalty period of ineligibility. A revocable trust is transparent — the home remains a countable asset for eligibility purposes — but avoids the probate pathway that enables recovery.

Ensure Proper Titling

If a trust isn't in place, other titling options can bypass probate:

• Joint tenancy with the adult child who will inherit
• Transfer on Death deed naming the intended beneficiary
• Community property with right of survivorship (for spouses)

Each option has tradeoffs. Joint tenancy can trigger gift tax issues and exposes the property to the co-owner's creditors. A TOD deed is simpler but doesn't protect during lifetime incapacity.

File the Notice of Death Promptly

The estate representative must submit a written Notice of Death to DHCS within 90 days of the date of death. After DHCS reviews the case, they'll send an estate recovery claim letter to the estate.

If the claim creates a genuine hardship — for example, the home is the sole residence of a surviving family member with limited income — heirs can file Form DHCS 6195 (Application for Hardship Waiver) within 60 days of the claim letter. The waiver isn't automatic, but it's worth filing when the circumstances qualify.

The Timing Problem

Estate planning for Medi-Cal must happen before the person needs care or loses capacity. Once cognitive decline progresses past the point of legal capacity, no new trusts can be created, no deeds can be signed, and the family is stuck with however the assets are currently titled.

The window between "healthy and not thinking about it" and "too late to do anything" is often shorter than families expect.

The Complete Planning Guide

The California Basic Estate Planning Kit includes a dedicated Medi-Cal planning checklist that covers the asset limits, the estate recovery rules, trust strategies, titling options, DHCS notification timelines, and the hardship waiver process. It coordinates with the trust funding and Prop 19 sections so the Medi-Cal strategy doesn't create unintended property tax consequences.

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