For many California families, the cost of long-term care is overwhelming. Nursing homes average more than $125,000 per year, and even assisted living facilities can drain savings quickly. That’s why so many families turn to Medi-Cal, California’s Medicaid program, for help covering these expenses.
But here’s the tricky part: qualifying for Medi-Cal often requires families to reduce assets, and the family home is one of the most confusing pieces of the puzzle. Do you need to sell the house? Will Medi-Cal take it? And what does selling mean for your parents’ care and inheritance planning?
In this article, we’ll explain everything you need to know about selling a house to qualify for Medi-Cal — and how it ties into the bigger picture of covering care costs. For a deeper dive, check out our full guide on selling a parent’s house to pay for care in California.
How Medi-Cal Qualification Works
Medi-Cal has strict income and asset limits to determine eligibility. Generally, to qualify, applicants can only have $2,000 in countable assets (for an individual). Certain assets, like personal belongings and a car, are exempt — but real estate is more complicated.
If your parent owns a home, whether it counts as an “exempt asset” depends on where they live:
- If they’re still living in the house, it’s usually exempt.
- If they move permanently into a nursing home, the home may no longer be exempt and could affect eligibility.
This is where selling sometimes becomes part of the conversation.
When Selling the House Makes Sense
To Qualify Faster
If the home is not exempt (for example, if your parent permanently moves into care), Medi-Cal may require it to be sold before they’re eligible. Selling can reduce assets quickly, making it easier to meet Medi-Cal limits.
To Pay for Care Privately
Some families choose to sell the house voluntarily, even if it’s exempt, so they can pay privately for care. This avoids Medi-Cal estate recovery later, which can place a lien on the property after death.
Example: A family in Sacramento sold their mother’s home before applying for Medi-Cal. The proceeds covered three years of private care and avoided estate recovery claims later.
The Risks of Selling Too Soon
While selling may help in some cases, it can also create challenges.
The Lookback Rule
Medi-Cal has a 30-month lookback period in California. This means any transfers or sales for less than fair market value can disqualify your parent from benefits for months or years. Always sell at market value and keep full documentation.
Losing an Exempt Asset
If the parent still lives in the house, selling may hurt eligibility since the home wouldn’t have been counted. In these cases, holding the home or transferring it properly (like into a trust) might be better.
Example: A son in Fresno sold his father’s home prematurely, thinking it was required. Because the father still technically lived there, Medi-Cal counted the cash proceeds against him, delaying approval for nearly a year.
Alternatives to Selling the House
Sometimes selling isn’t necessary. Families may be able to protect the home and still qualify for Medi-Cal.
- Living Trusts: Transferring the home into certain trusts may shield it from Medi-Cal recovery.
- Transfer-on-Death Deeds: Allows the home to pass directly to heirs without going through probate.
- Spousal Protections: If a spouse still lives in the home, Medi-Cal cannot force its sale during their lifetime.
- Hardship Waivers: Families can sometimes avoid estate recovery if selling would cause undue hardship.
For more detail on strategies, see the official California DHCS Medi-Cal Estate Recovery guide.
Tax Considerations When Selling
Selling a parent’s home may create tax consequences.
- Capital Gains Tax: If the home has appreciated in value, selling can trigger capital gains tax unless exclusions apply.
- Step-Up in Basis: If the parent passes away first, heirs may inherit with a step-up in basis, potentially reducing taxes when they sell.
Example: A Los Angeles family sold their father’s home while he was alive and paid $60,000 in capital gains tax. Had they waited and sold after his passing, the step-up in basis would have eliminated most of the tax burden.
Selling As-Is for a Faster Solution
For many families, selling as-is to a cash buyer is the simplest way to handle Medi-Cal qualification. It avoids the stress of repairs, open houses, and delays — and provides quick access to funds for care.
Example: A daughter in Riverside sold her father’s home as-is to a cash buyer within three weeks. This gave her immediate funds to pay for assisted living and helped her father qualify for Medi-Cal without months of uncertainty.
For more on how this process works, check out our guide on why a cash buyer is the easiest way to sell as-is in California.
What Families Should Consider Before Selling
- Is the home exempt under Medi-Cal rules?
- How will selling impact taxes?
- Could estate planning tools protect the property instead?
- Do you need cash immediately for care?
- Is there a spouse, minor, or disabled child still living in the home?
Thinking through these questions with an attorney or estate planner can help avoid costly mistakes. For guidance on protecting assets and planning ahead, see the California Department of Aging’s estate planning resources.
Real-Life Case Study
A Pasadena family faced a tough decision when their mother entered a nursing facility. The home was vacant, and Medi-Cal required the property to be sold. By working with a probate and estate planning attorney, the family sold the house at market value, used proceeds for care, and ensured eligibility within three months.
Meanwhile, a different family in Fresno sold a home too soon and faced a six-month Medi-Cal penalty period. This shows how timing and documentation are critical when selling to qualify.
Final Thoughts
Selling a house to qualify for Medi-Cal is a decision that carries both benefits and risks. Done correctly, it can speed up eligibility and provide funds for care. Done incorrectly, it can trigger penalties, taxes, and unnecessary loss of assets.
If your family is navigating this process, make sure you understand the rules, consider alternatives, and get professional advice. For more guidance, see our full guide on selling a parent’s house to pay for care in California.
At Mrs. Property Solutions, we’ve helped many California families sell parent-owned homes quickly for cash to cover care costs and meet Medi-Cal requirements. If you’re in this situation, reach out to our team — we’ll walk you through your options with honesty and care.