A pivotal issue in settlement discussions is how the claimant’s future medical needs will be addressed. Often, parties look to government programs to fill the gap between available settlement funds and the projected expenses. Negotiators need to be aware that Medi-Cal eligibility rules are changing.

Teddy Snyder

Things were better — for a while

Before July 2022, to qualify for Medi-Cal, an applicant could have no more than $2,000 in countable assets, and the applicant plus spouse could have no more than $3,000 in countable assets. Certain assets, such as the primary residence, were exempt. To make sure settlement proceeds would be available for the intended purpose, this very low ceiling required some sophisticated planning, usually involving special needs trusts and/or structured settlement annuities.

In July 2022, the asset ceiling was raised to $130,000 plus an additional $30,000 for each household member. Then, in January 2024, the asset ceiling was removed entirely. Income limits remained, so negotiators still had to consider how the income from a large settlement would be managed so that the injured person could retain Medi-Cal eligibility.

New rule for 2026

California Assembly Bill 116, Section 59, amends the Welfare & Institutions Code to reinstate the $130,000 limit plus $65,000 for each additional household member, effective Jan. 1, 2026.

Going forward, settlement planners need to consider whether settlement proceeds in the immediate aftermath of disbursement will fall under the new cap.

What if a Medi-Cal enrollee currently holds more than the specified limit? Enrollees must report their assets to renew eligibility. Simply transferring assets before the new rules kick in may or may not trigger the penalties that such transfers suffered in the past. Attorneys who arranged settlements during the 2024-2025 no-limit period may be hearing from their former clients.

Attorney Teddy Snyder mediates workers' compensation cases throughout California. She can be contacted through snydermediations.com.