Seniors and people with disabilities who rely on Medi-Cal for nursing-home care now face a financial test that California had suspended just a few years ago. Starting January 1, 2026, the state began enforcing a $130,000 cap on countable assets for individuals in non-MAGI Medi-Cal categories, with $65,000 added per additional household member. Anyone whose savings, investments, or other nonexempt property exceed that threshold at application or renewal risks losing coverage entirely, including coverage that pays for long-term care in skilled nursing facilities.
Why the $130,000 asset cap hits nursing-home residents hardest
The reinstated limit targets a specific slice of the Medi-Cal population: people 65 and older, individuals with disabilities, and residents of nursing homes. For these groups, the state now reviews both income and assets when determining eligibility, according to the DHCS asset FAQ. That dual screening did not apply during the period when California had eliminated asset testing, meaning some enrollees may have accumulated savings or received inheritances without jeopardizing their benefits.
The practical concern is straightforward. A nursing-home resident whose nonexempt assets sit above $130,000 could be found ineligible at their next renewal. Facilities billing Medi-Cal for that resident’s care would then need to convert the stay to private pay or negotiate a new arrangement. In some cases, residents might be required to spend down assets before regaining coverage, a process that can quickly drain modest life savings.
Counties with large populations of Medi-Cal-funded nursing-home residents stand to see the sharpest disruptions if significant numbers of current enrollees exceed the cap. Local legal-aid programs and benefits counselors are already warning that beneficiaries who do not understand the new rules could unknowingly fall out of compliance. The first concrete measure of that impact will arrive when the Department of Health Care Services publishes the quarterly eligibility-loss counts that state law now requires.
AB 116 and the quarterly data mandate behind the cap
AB 116, the health omnibus trailer bill for the 2025-26 session, authorized the return of resource testing for non-MAGI Medi-Cal. The bill set the nonexempt property disregard at $130,000 for a one-person household, scaling up by $65,000 per additional member to a maximum of 10 members. The California Department of Finance tracks the policy under the label “Reinstate Medi-Cal Asset Test Limits,” tying it to Welfare and Institutions Code sections 14005.62 and 14005.11.
Under the statute, the asset limit applies to non-MAGI pathways such as the Aged, Blind, and Disabled program and most long-term care eligibility categories. Exempt resources, such as a primary residence, remain protected, but bank accounts, brokerage accounts, and other liquid holdings are generally counted toward the cap. Advocates note that even relatively modest retirement savings can push a single person over the $130,000 threshold, especially in high-cost regions where people have tried to save for future medical needs.
A separate but related provision in Welfare and Institutions Code 14005.62 requires DHCS to publish quarterly data on the number of enrollees who lost Medi-Cal eligibility because of the asset limit. That reporting obligation is the only built-in accountability mechanism in the statute, and no quarterly reports have been released yet. Until those numbers appear, the actual scale of coverage losses will remain unknown.
Lawmakers designed the data requirement to give the Legislature, counties, and the public a way to monitor how the asset test functions in practice. If large numbers of seniors and people with disabilities lose coverage, the quarterly reports could become the basis for future oversight hearings or legislative revisions. For now, however, the law offers transparency without any automatic trigger to pause or adjust the limits if the harms prove larger than anticipated.
How DHCS is rolling out the new test
DHCS posted guidance on January 5, 2026, confirming that new applicants must report assets in their applications immediately. Current members will report assets at their next scheduled renewal after January 1, 2026. The agency said it had mailed notices and FAQs to affected households explaining which resources count, which are exempt, and how the new thresholds work.
The department’s implementation timeline means the impact will be staggered over the course of 2026 as different beneficiaries come up for renewal. Some residents in nursing homes may discover the new requirement only when a county worker requests detailed bank and investment statements. Others may learn about the change from facility social workers, legal-aid clinics, or family members who help manage their finances.
Advocates are urging beneficiaries to review their assets early and seek advice if they are near the limit. Strategies can include paying down debts, making necessary home repairs, or purchasing certain exempt items rather than holding excess cash. Still, those options are limited for people already living in institutions, whose main concern is maintaining uninterrupted coverage for care that can cost thousands of dollars per month.
For now, the reinstated asset cap represents a sharp policy turn for a state that had briefly moved toward eliminating financial barriers for older and disabled residents. How many people ultimately lose Medi-Cal-and how many nursing-home stays are disrupted-will depend on a combination of individual planning, county-level implementation, and the transparency promised by the new quarterly reports.
