Medi Cal’s Asset Test Is Back: Your Client’s Settlement Is Now Countable Property
***NEWSLETTER***
Why Plaintiff Attorneys Need to Revisit Public Benefits Planning Before Disbursement
For several years, California plaintiff attorneys had one less asset eligibility issue to consider when resolving cases for certain Medi Cal beneficiaries.
That period is over.
California eliminated the Medi Cal asset test beginning January 1, 2024. On January 1, 2026, the asset test returned for many beneficiaries whose eligibility is determined under Non MAGI rules. Through June 30, 2027, the individual limit is $130,000. Beginning July 1, 2027, that limit drops dramatically to $21,000 for one person and $31,000 for two people, with an additional $1,550 allowed for each additional household member, up to the applicable household limit.
For personal injury attorneys, that is not simply a Medi Cal eligibility update.
It is a settlement planning issue.
A recovery that appears entirely manageable under the current $130,000 threshold may produce a very different result after July 1, 2027. And because cash and bank accounts are among the assets Medi Cal counts, settlement proceeds distributed directly to the client can become part of the eligibility analysis.
The gross settlement may be excellent. The liens may be resolved. The closing statement may balance perfectly.
And the disbursement can still create a new problem for the client.
The Asset Test Did Not Return for Everyone
The first step is identifying which Medi Cal beneficiaries are actually affected.
The asset test generally applies to individuals whose Medi Cal eligibility is determined under Non-MAGI financial rules. DHCS identifies affected populations as including people age 65 or older, people with physical, mental, or developmental disabilities, individuals living in nursing facilities, and certain families whose eligibility is not determined through the federal tax-based MAGI framework.
That distinction matters.
A plaintiff attorney should not hear “my client has Medi Cal” and assume an asset limit applies. Conversely, counsel should not assume that because the client maintained Medi Cal after receiving property or funds in 2024 or 2025, the same treatment applies today.
The eligibility category comes first.
That makes one intake question particularly important:
What type of Medi Cal does the client actually have?
If the answer is unclear, the issue should be resolved before settlement planning begins.
The Numbers Have Changed Quickly
The recent history helps explain why this issue is easy to miss.
Beginning January 1, 2024, California eliminated the asset test for applicable Medi Cal programs. Beginning January 1, 2026, California restored the test at a comparatively high threshold of $130,000 for an individual, plus $65,000 for each additional household member, up to ten household members. DHCS now states that beginning July 1, 2027, the limit falls to $21,000 for one person, $31,000 for two people, and another $1,550 for each additional household member.
Consider the difference from the perspective of a settlement.
A single client with $10,000 in existing countable assets who receives $60,000 in net settlement proceeds may remain comfortably below the current $130,000 threshold.
Under the July 2027 individual limit, the same financial picture looks entirely different.
The settlement did not change.
The eligibility rule did.
That is why cases settling in late 2026 and throughout 2027 deserve particular attention. The attorney may be negotiating under the assumption of one eligibility framework while the client will be living with the proceeds under another.
What Does Medi Cal Count?
DHCS describes assets broadly as things a person owns that have value.
Countable assets can include cash, bank accounts, second homes, second vehicles, and other financial resources. Excluded assets can include the individual’s primary residence, one vehicle, household belongings, and certain retirement funds, depending upon the circumstances.
For plaintiff counsel, the practical significance is obvious.
Settlement proceeds do not remain “personal injury proceeds” for eligibility purposes merely because that is where the money originated. Once proceeds are distributed to the client and held as ordinary cash or in a bank account, they likely will fall within the category of assets Medi Cal evaluates unless an applicable exclusion or planning structure applies.
That is where settlement planning becomes critical.
The question is not merely:
How much is the client receiving?
The better question is:
What will the client own after the settlement is distributed, and how will those assets be treated under the benefits programs the client relies upon?
The Timing Problem
The return of the asset test also changes the importance of timing.
For existing affected members, DHCS states that assets are reviewed during the applicable annual renewal process. Agency guidance further provides that once assets are part of the member’s eligibility determination, eligibility related asset changes generally must be reported within 10 days.
That means the absence of an immediate termination notice following settlement should not be confused with the absence of an eligibility problem.
A client may receive settlement proceeds, continue using Medi Cal, and reasonably believe nothing has changed. The eligibility issue may emerge when the county receives updated financial information, during renewal, or after a required change is reported.
By then, the personal injury attorney may have closed the file.
That is precisely why this issue belongs in settlement planning rather than post settlement cleanup.
A Clean Disbursement Can Still Be a Bad Outcome
Plaintiff lawyers are trained to protect settlement proceeds.
Resolve the liens. Confirm the reductions. Address Medicare. Resolve Medi Cal’s reimbursement claim. Pay providers. Calculate fees and costs. Obtain the client’s approval. Disburse the net.
But lien resolution and eligibility planning answer different questions.
A Medi Cal recovery claim asks what the program may recover for benefits it previously paid in connection with the injury.
The asset test asks whether the client remains financially eligible for certain Medi Cal coverage after receiving the settlement.
Resolving one does not resolve the other.
This distinction is especially important in catastrophic injury cases. A client may depend on Medi Cal for medical services, attendant care, home and community-based services, or other support that could be difficult or extraordinarily expensive to replace privately.
In that setting, simply maximizing the size of the check written to the client may not maximize the value of the settlement.
Net recovery is not only about what remains after liens.
It is also about what the client keeps after the consequences of receiving the money are considered.
This Is Where Public Benefits Planning Enters the Case
The return of meaningful asset limits does not mean every Medi Cal beneficiary requires a trust.
It does mean plaintiff counsel should identify the issue early enough for the appropriate professional to evaluate the available options.
Depending upon the client’s age, disability, benefits, settlement amount, existing assets, family circumstances, and future needs, planning may include lawful use of exempt assets, appropriate spending strategies, an ABLE account, a special needs trust, a pooled trust, a structured settlement, or some combination of planning tools.
Those options are not interchangeable.
For example, DHCS specifically excludes first party special needs trusts funded with assets belonging to the beneficiary, including settlement proceeds. Qualifying first party trusts can allow a disabled individual to maintain public benefits eligibility despite assets that might otherwise be countable, although statutory requirements and Medicaid payback provisions apply. A traditional first party special needs trust under the applicable federal provision generally must be established for a disabled person under age 65.
ABLE accounts provide another potential tool for certain individuals with qualifying disabilities. Beginning in 2026, federal eligibility expanded to individuals whose disability began before age 46. ABLE accounts have their own contribution, expenditure, and benefit rules and should not be treated as a substitute for individualized planning.
The plaintiff attorney does not need to become a public benefits attorney, probate attorney, financial planner, or professional fiduciary.
The attorney does need to recognize when those professionals belong in the conversation.
The Planning Needs to Happen Before the Money Moves
This is the point plaintiff attorneys should take most seriously.
Public benefits planning is not something to begin after the settlement check has been handed to the client.
By that point, some strategies may be more difficult, more expensive, or no longer available in the same manner. Settlement documents, structured settlement arrangements, trust funding, court approval, fiduciary selection, and benefit analysis can all require time.
The better approach is to identify the issue while the case is moving toward resolution.
If the client receives Medi Cal, ask what eligibility category applies.
If disability is involved, identify the client’s other public benefits.
If the net recovery could exceed the applicable asset limit, make the appropriate referral before disbursement.
And if the case is expected to resolve near or after July 1, 2027, analyze the settlement against the $21,000 threshold, not merely the $130,000 limit in effect today.
The settlement date is not the only date that matters.
July 1, 2027 Changes the Case Evaluation
The move from $130,000 to $21,000 substantially expands the universe of settlements that can create potential eligibility issues.
Under the current limit, many routine personal injury recoveries may not place a single beneficiary over the asset threshold.
Beginning July 1, 2027, a relatively modest net settlement may do exactly that.
That means public benefits planning will no longer be an issue reserved primarily for seven figure catastrophic injury cases.
A $40,000 recovery can matter.
A $60,000 recovery can matter.
A policy limits settlement, far under the total value of the case, can matter.
And a case that seemed too small to justify sophisticated settlement planning may suddenly require it because the client relies upon means tested benefits.
The lower threshold changes the scale of cases that plaintiff firms should be screening.
The Intake Process Should Change Too
The easiest time to identify this problem is not settlement.
It is intake.
Plaintiff firms should know whether the client receives Medi Cal, Medicare, SSI, SSDI, IHSS, or other public benefits. The distinction between programs matters because the rules governing income, resources, reimbursement, and continued eligibility are not the same.
That information should then be revisited before mediation or serious settlement negotiations.
Benefits change. Eligibility categories change. Clients turn 65. Disability determinations occur. Medicare eligibility begins. Family circumstances shift.
A benefits profile collected two years earlier may no longer describe the client sitting in front of you at settlement.
Public benefits should therefore be treated like lien information: identify it early, update it as the case develops, and verify it again before money leaves trust.
A Plaintiff Attorney Settlement Checklist
Before distributing a recovery to a client receiving Medi Cal, consider whether the file answers the following questions:
- What Medi Cal eligibility category does the client have?
- Is the client subject to the Non MAGI asset test?
- What is the applicable asset limit on the anticipated date of distribution?
- What countable assets does the client already own?
- What will the client’s total countable assets look like after settlement?
- Does the client also receive SSI, SSDI, Medicare, IHSS, housing assistance, or other benefits?
- Could the settlement affect programs other than Medi Cal?
- Has the client been referred to a qualified public benefits or special needs planning professional when appropriate?
- Does any planning need to be completed before settlement proceeds are distributed?
- Has the firm separately resolved Medi Cal’s reimbursement claim rather than confusing lien resolution with future eligibility?
That is not an invitation for the personal injury lawyer to leave the litigation lane.
It is a framework for recognizing when another lane intersects with the settlement.
The Bigger Lesson: The Client Lives on the Net
Plaintiff attorneys spend enormous time maximizing case value.
That work matters.
But a client does not experience the verdict or settlement as a gross number. The client experiences what remains after attorney fees, costs, liens, reimbursement claims, taxes where applicable, future medical obligations, and public benefits consequences.
The return of California’s Medi Cal asset test adds another variable to that equation.
Through June 30, 2027, the individual asset limit remains $130,000.
Beginning July 1, 2027, it falls to $21,000.
For some clients, that difference can determine whether a routine settlement distribution preserves or jeopardizes access to essential health coverage.
Plaintiff counsel does not need to solve every public benefits issue personally.
But counsel should see the issue before the client receives the check.
The Bottom Line
Medi Cal’s asset test is back, and the rules become substantially more restrictive beginning July 1, 2027.
The implications extend beyond Medi Cal administration. They reach directly into personal injury settlement planning.
Identify the client’s benefits. Determine whether the asset test applies. Understand what the client will own after settlement. Resolve the lien, but do not stop there. Bring in public benefits planning when the facts require it, and do so before settlement proceeds move.
Because a settlement that maximizes the recovery but unnecessarily jeopardizes essential benefits is not the outcome plaintiff counsel intended to create.
Members of Lien Project Network can access additional training on Medi Cal, special needs trusts, public benefits planning, settlement strategy, and lien resolution at www.lienprojectnetwork.com.
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