Since Jan. 1, 2024, when the asset test for Medi-Cal was abolished in California (only), many more people now qualify for Medi-Cal.

Unless a person receives Supplemental Security Income (“SSI”) or intends to leave California, the need to put assets into an irrevocable Special Needs Trust is not relevant to receiving Med-Cal where eligibility is not linked to SSI benefits.

What, however, is now relevant, for many widely used Medi-Cal programs, is one’s available, countable income as determined under California regulations (22 CCR 50500-50517 et seq.); except for the Affordable Care Act and the 250% Working, Disabled Program Medi-Cal

Programs where eligibility is computed using one’s adjusted gross income reported on one’s income tax return.

Thus, if an applicant were able to control their available, countable income they might qualify for the Aged or Disabled (no share of cost) Medi-Cal if their available, countable income was under $1,732 per month (2024).

Otherwise, if their income presently exceeds $1,732/month, they would still benefit by reducing their share of cost by lowering their income for purposes of the Medically Needy (share of cost) Medi-Cal.

Share of cost is what a Medi-Cal beneficiary must first pay on a monthly basis before Medi-Cal pays anything.

California Medi-Cal trust income regulations (22 CCR 50489 to 50489.9) provide a planning opportunity because income received by most revocable and irrevocable trusts is not considered available, countable income for eligibility and share of cost computation purposes for purposes of certain types of Med-Cal, excluding MAGI Medi-Cal, Working, Disabled Medi-Cal and SSI-categorically linked Medi-Cal.

However, distributions by a trust for the benefit of, or directly to, a Medi-Cal applicant or beneficiary may count as income at the time of distributions and then subject to special income rules regarding what is available, countable income.

That is, distributions to the Medi-Cal beneficiary do count as income as many distributions to others to pay for shelter, utilities and food for the Medi-Cal beneficiary’s benefit.

However, distributions to a third party vendor of goods or services, other than shelter, utilities and food, do not count as available, countable income. This is based on an interpretation of California’s trust income rules that is presently accepted by the Department of Health Care Services (“DHCS”) who administers California’s Medi-Cal programs (see All County Wide Director’s Letter’s “ACWDL” #’s 23-20, 23-21, and 23-22E (https://www.dhcs.ca.gov/services/medi-cal/eligibility/letters/Pages/2023ACWDLs.aspx).

Accordingly, if a Medi-Cal beneficiary were to receive, whenever possible, all of his or her income, other than social security and retirement income, by owning all income producing assets (e.g., investments and rental properties) inside a trust for their benefit, then the income earned by such trust owned assets would not count when received by the trust.

However, any distributions (whether of trust income or principal) by the trustee to the Medi-Cal beneficiary would count as income when distributed, as might distributions for shelter, utilities and/or food, collectively referred to as ‘in kind support and maintenance (“ISM ”).

That said, however, such ISM payments only count when one-hundred percent is paid by the trustee (or by any third party provider) and so do not count if the Medi-Cal beneficiary were to pay even a small portion of such support payments (e.g., by using their social security income). Also such ISM payments count at a much reduced rate.

The terms of the Trust may determine whether or not the Medi-Cal eligibility worker counts the trust’s own income as available, countable income. That is, does the Trust require the Trustee to make distributions to or for the benefit of the beneficiary? If so, the eligibility worker may, perhaps, say that income generated by the trust assets is available and countable income for purposes of Medi Cal eligibility and share of cost computations.

A possible solution is to amend (or modify) the trust distribution standard to allow the Trustee discretion over whether to make distributions to or for the benefit of the beneficiary. The desired result is to allow the trustee to make non support payments at the trustee’s discretion.

Much yet remains to be seen as to how DHCS applies the income trust rules to different trust distribution standards. Also, it remains to be seen whether the new president rescinds the federal consent that allowed California to remove its asset test when all other states still have asset tests.

The foregoing discussion is not legal advice. Anyone confronting Medi-Cal issues should consult with a qualified attorney.

Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. and 707-263-3235.