The Medi-Cal Retirement Plan Trap

Most retirement plans are treated as exempt assets when a person applies for Medi-Cal. These funds are exempt if the family member whose name it is in does not want Medi-Cal (such as the community spouse who has an ill spouse in a nursing home).

If held in the name of a person who wants Medi-Cal and payments of principal and interest are being received, the balance is considered unavailable and is not counted.

An applicant taking the required minimum distribution after age 70 and one-half will automatically meet this rule. If the applicant is younger, he or she must receive a payment of principal and interest from each account, but there is no minimum.

The trap is the estate recovery. Under the recovery regulations, the retirement plan is subject to recovery if the estate is named as the beneficiary. This happens when no beneficiary is designated on the retirement plan. Thus, it is imperative that one or more individual beneficiaries (not the living trust), be named as the plan beneficiary.


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Ratner & Pinchman, PC serves clients in Southern California, including San Diego County, Orange County, Riverside County and the cities of Chula Vista, Coronado, Del Mar, El Cajon, Encinitas (Cardiff-by-the-Sea, Leucadia, Olivenhain), Escondido, Imperial Beach, La Mesa, Lemon Grove, National City, Oceanside, Poway, San Diego, San Marcos, Santee, Solana Beach, and Vista.  We are San Diego Elder Law and Medi-Cal Planning Attorneys.