The New Health Care Law and Its Impact on Medi-Cal and Elder Law Planning in California

By July 1, 2014Elder Abuse

By: Monica Goel, Esq.
Partner at Tredway, Lumsdaine & Doyle

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA) into law. The new health care law aims to increase access to health insurance through more accessible private insurance and an expansion of Medicaid (Medi-Cal in California).

As an elder law attorney, it is impossible not to discuss the many new changes the ACA makes to the eligibility rules for Medi-Cal, including who will be covered under Medi-Cal, how income, assets and household size will be determined. The new changes and requirements will become effective January 1, 2014.

Currently, there is no Medi-Cal coverage for adults unless they have minor children living at home, have a disability, are over the age of 65, or pregnant. But under the ACA, starting January 1, 2014, Medi-Cal will expand coverage to most adults who are at or below 133% of the federal poverty guidelines, also referred to as the federal poverty level (FPL). That means approximately three million additional Californians will be Medi-Cal eligible as a result of the ACA. For a
single adult, 133% FPL is currently approximately $1,207 per month ($14,484 per year). The ACA will also expand Medi-Cal up to age 26 for former foster youth who were enrolled in Medi-Cal at the age of 18.4

The ACA moves away from the welfare-program income rules in Medi-Cal. Instead, income eligibility
will be based on a tax-based system for counting individual or household income called Modified Adjusted Gross Income (MAGI). MAGI is defined as adjusted gross income increased by certain other income that is not usually taxed, including foreign income earned outside the United States and interest received or accrued which is exempt from tax. “Household income” is the MAGI of the taxpayer plus the aggregate MAGI of all other persons for whom the taxpayer took a deduction and who were required to file a tax return in the taxable year.

States must establish income eligibility thresholds for Medi-Cal that are not less than the effective
income eligibility levels under the state plan on the date of the ACA’s enactment – March 23, 2010.
During the transition to MAGI methodology, the state must establish an equivalent income test to
ensure that people do not lose Medi-Cal coverage.

Under the ACA, states may not use an assets test to determine eligibility for Medi-Cal for most populations. The ACA defines a household’s size for a taxpayer as the number of individuals for whom the taxpayer can claim a deduction under section 151 of the Internal Revenue Code. This is different than the current Medi-Cal rules for determining a family budget unit. For example, under the current rules a stepmother who files taxes with her stepson would not count in determining
the stepson’s family size or household income. But under the MAGI rules, this same stepmother will be included in her stepson’s family unit and her income will be counted.


 Some groups will still need to meet an assets test to qualify for Medi-Cal under the ACA. The existing income and assets rules will continue to be used for:

• Individuals who are eligible for Medi-Cal through another program including SSI, Adoption
Assistance, and foster youth

• Individuals who are 65 years of age or older

• Those who are eligible for Social Security Disability Income

• Medically Needy individuals

• Those in a Medicare Savings program

• People with a disability.

The MAGI rules also do not apply to income eligibility determinations for Express Lane, Medicare Part D prescription drug low-income subsidies, or Medi-Cal long term care services.



Monica Goel is a partner at Tredway, Lumsdaine & Doyle, with offices in LA and Orange County. She was admitted to the bar in December, 2000. Education: University of Southern California at Los Angeles (B.A., 1997); University of Southern California Law School, Los Angeles, (J.D. 2000). Monica was the 1998/1999 Trope and Trope Family Law Fellow and did an Externship in the Chambers of Judge Kim McLane Wardlaw, 9th Circuit Court of Appeals in 1999. Monica won the volunteer of the year award from the City of Downey Coordinating Council in 2007. Monica is a member of the Los Angeles, Orange County and American Bar Associations, and the Estate Planning/Probate Section of the State Bar of California. Monica Goel’s practice focuses on estate planning, trust administration, probate administration, elder law, trust and probate litigation.

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