California Medi-Cal Rules Changed in 2026: Why Now Is the Time to Review Your Estate Plan
Most people do not spend much time thinking about long-term care until a crisis occurs. Unfortunately, that is often the worst time to begin planning. Over the years, I have met with many individuals and couples who assumed they had plenty of time to update their estate plans. Then a spouse suffered a stroke. A parent received a diagnosis of Alzheimer’s disease. Someone experienced a serious fall, hospitalization, or unexpected decline in health. Suddenly, the family was faced with difficult decisions involving medical care, finances, and legal documents. Recent changes to California Medi-Cal rules (effective January 1, 2026) provide an excellent reason to review your estate plan now rather than waiting until a crisis develops.
Estate Planning Is About More Than What Happens After Death
When most people think about estate planning, they think about wills, trusts, and who will receive their property after they pass away. However, one of the most valuable functions of a well-designed estate plan is helping protect you and your family while you are still living.
A comprehensive estate plan should help answer questions such as who will manage your finances if you become incapacitated, who will make medical decisions if you cannot communicate, and how your family can avoid unnecessary stress and expense.
What Changed Under the New Medi-Cal Rules?
California’s Medi-Cal program has undergone significant changes in recent years. Effective January 1, 2026, asset limits once again became an important consideration for many individuals seeking Medi-Cal benefits.Many Californians assumed that asset protection and long-term care planning were no longer concerns because prior rule changes had relaxed certain asset limitations. The 2026 changes remind us that planning remains important.
The Cost of Long-Term Care
Long-term care may include in-home caregivers, assisted living communities, memory care facilities, and skilled nursing facilities. These services can cost thousands of dollars each month. In some cases, annual care costs may exceed $100,000.
Many clients tell me they are less concerned about taxes than they are about the possibility of needing long-term care and exhausting their savings.
Why Dementia Planning Matters
One of the greatest concerns facing many retirees today is the possibility of cognitive decline. Alzheimer’s disease and other forms of dementia affect millions of Americans and often create significant challenges for families. Family members may notice missed bill payments, confusion regarding finances, or difficulty managing investments long before a formal diagnosis is made. When powers of attorney and advance health care directives are already in place, families are often better positioned to help.
A Situation I Have Seen Many Times
A family postpones planning because everything appears fine. Then a parent experiences a sudden health crisis. The children begin searching for trust documents, powers of attorney, advance health care directives, and financial records. Sometimes the documents are outdated. Sometimes they were never signed.
Planning ahead does not eliminate every problem. However, it frequently makes difficult situations much easier to manage.
“But I Already Have a Trust”
Having a revocable living trust is excellent. Trusts can help avoid probate, provide continuity during incapacity, and simplify administration after death.
However, many people are surprised to learn that a revocable living trust does not automatically solve every long-term care planning issue. Many trusts were created years ago and have never been reviewed.
Why Powers of Attorney Are So Important
A Durable Power of Attorney allows someone you trust to handle financial matters if you become unable to do so yourself. Likewise, an Advance Health Care Directive allows you to designate who will make medical decisions if you cannot communicate your wishes.
Protecting a Spouse
One of the greatest concerns among married couples is protecting the spouse who remains healthy. Many people mistakenly believe that if one spouse requires nursing home care, the family must spend nearly everything before assistance becomes available.
Every situation is unique. Early planning generally creates more options and flexibility.
Estate Planning Is a Gift to Your Family
Many people think estate planning is about documents. In reality, estate planning is often about reducing stress for the people you love.
When important decisions have already been made and legal documents are in place, children and spouses are less likely to face uncertainty during a medical crisis.
How Often Should You Review Your Estate Plan?
A good rule of thumb is every three to five years. You should also consider a review after retirement, the death of a spouse, a significant inheritance, a major health diagnosis, a move, or significant legal changes.
Frequently Asked Questions
Does a revocable living trust protect assets from nursing home costs? Generally, no.
Can I still qualify for Medi-Cal if I own my home? Often, yes.
What happens if I become incapacitated without a power of attorney? Your family may need court authority to manage your affairs.
The Bottom Line
The biggest mistake I see families make is assuming there will always be more time. None of us can predict the future. What we can do is prepare.
The families who generally have the most options are the families who planned before they needed care. If your estate plan has not been reviewed in several years, or if you have questions regarding California’s 2026 Medi-Cal changes, now may be an excellent time to schedule a review.
The best time to plan is before you need the plan.
About Michael J. Young
Michael J. Young is a California attorney whose practice focuses on estate planning, elder law, Medi-Cal planning, probate, and trust administration. He assists individuals and families throughout California, including Walnut Creek, Rossmoor, Contra Costa County, and surrounding communities.
Walnut Creek Elder Law in Walnut Creek, California
Michael J. Young is an experienced elder law, estate planning and asset protection planning attorney in Walnut Creek, CA. Mr. Young advises his clients regarding their estate planning needs with an emphasis on asset protection, Medi-Cal qualification, and preservation of assets for various levels of their care as they get older. Mr. Young’s journey into elder law began when his mother suffered from an acute injury that required her to be in a skilled nursing facility.
He is co-author of the book, Don’t Go Broke in A Nursing Home and is the author of the “Alzheimer’s Legal Survival Guide.” Mr. Young presents monthly workshops in Walnut Creek regarding estate planning, asset protection, and Medi-Cal planning. He has helped many clients over the years successfully qualify for Medi-Cal and has protected their assets from state recovery. Call today to schedule a consultation (925) 256-0298.