If you’ve ever wondered why Medi-Cal still requires that people with disabilities and the elderly keep only $2,000 in savings in order to qualify for services — well, so have we. Fortunately, that’s finally changing.
A new California law, which goes into effect on July 1, 2022, increases the asset limit for Non-Modified Adjusted Gross Income (Non-MAGI) Medi-Cal program eligibility. This will expand Medi-Cal access for elderly people and people with disabilities, including children.
Historically, Medi-Cal used the same financial eligibility criteria as Supplemental Security Income (SSI), which set specific income caps depending on family size. These rules also included an asset limit of $2,000 ($3,000 for married couples), with specific exemptions for the family home and a vehicle, among others. (Note that there is no asset limit for recipients of SSDI.)
Under the Affordable Care Act, California expanded Medi-Cal access by using new Modified Adjusted Gross Income (MAGI) calculations to assess eligibility. This approach removed the asset limit for most applicants. However, the change did not apply to programs designed for elderly people and people with disabilities, who therefore remained subject to strict asset caps.
The new law taking effect in July will allow elderly people and people with disabilities in California to save more for the future without losing their health care benefits. For 2022, the asset limit will start at $130,000 for individuals, and increases with family size. In the coming years, the limit will be phased out entirely.
What this means for children with disabilities will vary. In order to access Medi-Cal’s institutional deeming waivers, families already have to demonstrate that they cannot qualify for Medi-Cal based on household income. At that point, only the child’s income and resources are considered. This has always meant that children with disabilities couldn’t hold any significant assets in their own name, since their personal savings had to be below $2,000. This will no longer be the rule.
An even more significant impact may come later, as kids transition to adulthood; the new law may influence parents’ decisions regarding the best ways to save for their children’s futures. Families may still want to take advantage of financial planning options like special needs trusts and ABLE accounts, but they will have the freedom to allow their child to maintain a regular savings account as well, if SSI benefits are not of concern.
Note that this change only impacts Medi-Cal, and does not apply to SSI benefits, which follow federal regulations and retain the original asset limits. Because this is a California law, these rule changes will not apply for families moving out of state and seeking to establish Medicaid eligibility in their new state of residence.
Because the scope of this legislative change is limited, we recommend that you consult with a financial planner to help you make the best decisions for your child’s future given all the considerations at both the state and federal levels.
