Long-term care is the financial risk most Californians have not planned for. It is not medical care in the sense Medicare understands it — it is help with the ordinary activities of daily living, and it can run for years. California is an expensive state in which to need it, and the single most common misconception is that Medicare will pay. With narrow exceptions, it will not.
California is also, as of recently, one of the most favorable states in the country for accessing Medi-Cal to pay for that care, because the asset test was eliminated entirely. That change reshapes how Californians should approach long-term care planning, and a great deal of published advice — including advice from national websites and from planners trained in other states — has not caught up. The Holmes Law advises California families on paying for long-term care, the documents that have to be in place before a crisis, and how the pieces interact with an estate plan.
What Long-Term Care Actually Means
Long-term care is assistance with activities of daily living — bathing, dressing, toileting, transferring, continence, and eating — or supervision required because of a cognitive impairment such as dementia. It is called custodial care, and that label is the source of the Medicare confusion: Medicare pays for skilled care, and custodial care is by definition not skilled.
California offers a range of settings, and most families move through several:
- In-home care. A paid caregiver in the person’s own home, from a few hours a week to around the clock. Most people’s strong preference, and at high hourly volumes it can cost more than a facility.
- Adult day programs. Community-Based Adult Services and similar programs provide daytime supervision, meals, activities and some health services, which can let a family caregiver keep working.
- Residential Care Facilities for the Elderly. What most Californians call assisted living. Licensed by the California Department of Social Services, Community Care Licensing Division. RCFEs provide housing, meals, supervision and personal care, but are not licensed to provide skilled nursing.
- Memory care. Usually a secured unit within an RCFE, with staff trained in dementia care.
- Skilled nursing facilities. Licensed by the California Department of Public Health, providing 24-hour nursing. This is the setting Medi-Cal most commonly pays for.
- Continuing care retirement communities. A campus offering independent living through skilled nursing under a continuing care contract, regulated by the Department of Social Services. These contracts typically involve a substantial entrance fee and should be reviewed by counsel before signing — the refundability terms and the conditions for transfer between levels of care are where the money is.
What Medicare Does and Does Not Cover
Medicare covers a limited skilled nursing facility benefit, and the conditions are strict. Coverage requires a qualifying inpatient hospital stay of at least three consecutive days — observation status does not count, a distinction that has cost many families tens of thousands of dollars — followed by admission to a Medicare-certified facility for skilled care related to the hospital stay.
When it applies, Medicare covers up to 100 days per benefit period: days 1 through 20 in full, and days 21 through 100 subject to a daily coinsurance amount that changes annually. Coverage ends when the person no longer needs daily skilled care, which is frequently well before day 100.
Medicare also covers intermittent skilled home health care and hospice for a terminal illness. What it does not cover, at all, is ongoing custodial care — the caregiver who helps someone bathe and dress every day, indefinitely. That is the expense families actually face, and Medicare is not the answer to it.
If a Medicare Advantage plan or a facility issues a notice terminating skilled coverage, there is an expedited appeal process with short deadlines. It is worth using — reversals happen.
Medi-Cal: California Eliminated the Asset Test
This is the most important development in California long-term care planning in decades, and it is still not widely understood.
Under legislation enacted in 2021, California phased out the asset limit for non-MAGI Medi-Cal — the category that covers long-term care. The limit first rose sharply in July 2022, and then, effective January 1, 2024, the asset limit was eliminated entirely. There is no longer a countable-asset test for long-term care Medi-Cal in California. Savings, a second property, retirement accounts, and life insurance no longer disqualify an applicant on the basis of value.
The practical consequences are substantial. The elaborate spend-down and asset-conversion strategies that dominate long-term care planning in other states are largely unnecessary in California. Families no longer need to impoverish a parent, buy annuities, or transfer the house in a panic to qualify. A great deal of national content on this subject simply does not apply here.
Income rules still apply. A Medi-Cal recipient in a nursing facility is generally expected to contribute most of their monthly income toward the cost of care — the “share of cost” — retaining a small personal needs allowance, with amounts protected for a spouse at home. Income planning, not asset planning, is now where the analysis sits. And a married couple should still get advice: the rules protecting the spouse who remains at home are meaningful and are not automatic.
Because this is a recent and significant change, and because program rules continue to evolve, any long-term care plan built on pre-2024 assumptions should be re-examined against the current rules before it is relied on.
Estate Recovery in California Is Narrow
The second California advantage concerns what happens after death. Federal law requires states to seek recovery of certain Medicaid costs. California narrowed its program substantially by legislation effective for deaths on or after January 1, 2017. California recovery is now limited to the probate estate, applies only to what federal law requires, cannot be pursued against the estate of a person survived by a spouse or registered domestic partner, is capped at the value of the estate, and is subject to hardship waivers.
Limiting recovery to the probate estate is the key. Assets that pass outside probate — property held in a funded revocable living trust, a properly recorded transfer on death deed, joint tenancy, or beneficiary designations — are generally beyond the reach of California’s recovery program. This is the opposite of Idaho, whose statute expressly reaches living trusts and joint tenancy.
The result is that ordinary probate-avoidance planning, which most California families should be doing anyway, does most of the work that elaborate asset protection planning does elsewhere.
In-Home Supportive Services
California’s In-Home Supportive Services program pays for a caregiver to assist an eligible person in their own home, and it is the most underused resource in the state. IHSS can cover personal care, meal preparation, housework, laundry, shopping, accompaniment to medical appointments, and protective supervision for someone with a cognitive impairment who cannot safely be left alone.
Two features make it distinctive. The recipient generally selects and directs their own provider — and in many cases that provider can be a family member, including an adult child, who is then paid for care they were already giving for free. And because IHSS eligibility is tied to Medi-Cal, the elimination of the asset test has widened access considerably.
Assessments determine the authorized hours, and the protective supervision category in particular is frequently under-awarded on a first assessment. Appeals are available and are often worth pursuing.
Long-Term Care Insurance
Traditional long-term care insurance pays a daily or monthly benefit once the insured cannot perform a set number of activities of daily living or has a qualifying cognitive impairment. Premiums are lower the earlier the policy is bought, and underwriting tightens quickly with age and health history.
Points to examine in any policy: the elimination period before benefits begin, whether the benefit is a daily or a monthly pool, whether inflation protection is included and at what rate, whether home care is covered on the same terms as facility care, and the insurer’s history of premium increases on in-force policies — which has been a real problem in this market.
Hybrid life insurance and annuity products with long-term care riders have largely displaced standalone policies. They cost more up front but pay a death benefit if care is never needed, which removes the use-it-or-lose-it objection. California also operates the California Partnership for Long-Term Care, which certifies qualifying policies; historically the Partnership’s advantage was asset disregard for Medi-Cal purposes, an advantage that means considerably less now that the asset test is gone.
For most Californians the honest analysis is a comparison: the lifetime cost of premiums against self-funding the risk, with Medi-Cal as the backstop. Because that backstop is now more accessible in California than in most states, the case for insurance here often rests on wanting choice of setting and quality of care rather than on avoiding impoverishment.
VA Benefits
A wartime veteran or surviving spouse who needs help with daily activities may qualify for VA pension with Aid and Attendance, a monthly benefit that can be used for in-home care or facility care. Eligibility involves service requirements, a disability or age requirement, and income and net worth limits with a lookback on asset transfers. The benefit is modest relative to the cost of full-time care but meaningful as part of a funding plan, and it is frequently overlooked.
The Documents That Have to Be Signed First
Everything above assumes someone has legal authority to act. If capacity is lost before the documents exist, the family’s only remedy is a California probate conservatorship — a petition, a court investigator, notice to relatives, a bond, court-approved fees, and continuing supervision that can run for years.
The package should include a durable power of attorney drafted with the specific authority long-term care planning requires, an Advance Health Care Directive naming a health care agent and recording treatment preferences, a HIPAA authorization, and a funded revocable living trust so that assets are managed without interruption and pass outside probate — which, given California’s probate-estate-only recovery rule, is also what keeps them beyond the reach of the recovery program. A POLST form may be appropriate for someone with a serious advanced illness.
Families relying on an adult child to provide care should also consider a written personal care agreement setting out duties, hours, and compensation at a reasonable market rate. It documents the arrangement, prevents later claims from siblings that the caregiver was taking money, and treats the payment as compensation rather than a gift.
Frequently Asked Questions
Does Medicare pay for a nursing home?
Only in narrow circumstances — up to 100 days of skilled care after a qualifying three-day inpatient hospital stay, with coinsurance after day 20, and only while daily skilled care is needed. It does not pay for ongoing custodial care.
Do I have to spend down my savings to qualify for Medi-Cal in California?
No. California eliminated the asset limit for non-MAGI Medi-Cal effective January 1, 2024. Income rules and a share of cost still apply, but there is no longer an asset test for long-term care Medi-Cal.
Will the state take my house?
California recovery is limited to the probate estate, does not apply where there is a surviving spouse or registered domestic partner, and is subject to hardship waivers. A home held in a funded living trust or passing by a recorded transfer on death deed is generally outside the probate estate.
Can my daughter be paid to take care of me?
Often yes, through IHSS if the recipient is eligible, or privately under a written personal care agreement at a reasonable rate. Put it in writing either way.
Is it too late to plan if a parent is already in a facility?
No. Crisis planning is a real and useful category, particularly in California now that the asset test is gone. What cannot be fixed after the fact is missing legal authority — if a parent has lost capacity and signed nothing, a conservatorship is the only route.
Speak With a California Elder Law Attorney
The Holmes Law advises California families on long-term care funding, Medi-Cal and IHSS, durable powers of attorney and advance health care directives, personal care agreements, continuing care contracts, and the estate planning that keeps assets out of probate and out of the recovery program.
To discuss long-term care planning, contact the office. You may also want to review our pages on California elder law, CA Medicaid planning, CA incapacity and powers of attorney, and CA Medicare.