Many California families raising a child with a developmental disability run into the same wall: their household income is too high for regular Medi-Cal, but their child’s care needs are exactly the kind that Medi-Cal-funded services like In-Home Supportive Services (IHSS) are meant to cover. If your child is a regional center client, there’s a path around that wall. It’s called institutional deeming, and it lets Medi-Cal evaluate your child’s eligibility on their own income and resources only — not your family’s. Here’s how it works, what changed in 2026, and what looks different if your family is enrolled in the Self-Determination Program (SDP).
What “Institutional Deeming” Actually Means
Medi-Cal is a need-based program. When a child lives at home, the state normally counts a share of the parents’ income and resources toward the child’s eligibility — a process called “deeming.” For many working families, that deemed income pushes a child’s Medi-Cal application over the limit, even though the family’s income isn’t enough to privately cover a child’s medical equipment, nursing care, or supervision needs.
Institutional deeming is an exception built into Medi-Cal’s rules for a specific group: children who, because of a developmental disability, already qualify for the level of care provided in an intermediate care facility for the developmentally disabled (ICF/DD) — in other words, children who would be eligible for institutional placement if their family chose it. Because these children already qualify for that higher level of care, Medi-Cal is permitted to evaluate them as though they lived in an institution, where only the individual’s own income and resources are counted, not a parent’s or spouse’s. Disability Rights California’s Rights Under the Lanterman Act (RULA) manual and the Department of Developmental Services (DDS) both describe the mechanism this way, and the county procedures that implement it trace back to Department of Health Care Services (DHCS) All County Welfare Directors Letters (ACWDLs) 00-08, 00-59, and 01-24, since supplemented by more recent guidance including ACWDLs 17-25 and 18-19.
In practice, this is delivered through Medi-Cal’s Home and Community-Based Services for the Developmentally Disabled waiver (HCBS-DD), a federal 1915(c) waiver designed to fund community-based, in-home services for regional center clients who would otherwise qualify for a state-funded residential placement. Your child does not have to be assessed for actual placement — the “institutional” comparison is a legal fiction used only to determine Medi-Cal eligibility, not a step toward removing your child from your home.
Quick Reference: Key Terms in This Article
- MFBU
- Medi-Cal Family Budget Unit — the group of people whose income and resources are normally counted together when Medi-Cal decides eligibility.
- Institutional deeming
- Evaluating a child's Medi-Cal eligibility as if they lived in an institution, so only the child's own income and resources count.
- ICF/DD
- Intermediate Care Facility for the Developmentally Disabled — the institutional level of care used as the eligibility benchmark for deeming.
- HCBS-DD Waiver
- The Medi-Cal Home and Community-Based Services waiver that delivers institutional deeming to regional center clients who live at home.
- ACWDL
- All County Welfare Directors Letter — DHCS guidance that tells county eligibility workers how to apply Medi-Cal rules.
- SDP
- Self-Determination Program — an optional way to receive regional center services with an individual budget instead of regional center-purchased services.
- FMS
- Financial Management Services — the required vendor that manages an SDP participant's budget and pays providers.
- DS 2200 / DHCS 7096
- The regional center referral form used for the initial deeming application, and the annual renewal confirmation form, respectively.
Who Qualifies
To be considered for institutional deeming through the HCBS-DD waiver, a regional center client generally must:
- Be under 18 years old and live at home with their family
- Have a diagnosed developmental disability and be an active regional center client
- Have a valid Social Security number
- Have at least two moderate-to-severe support needs across self-help (e.g., dressing, feeding, toileting), social-emotional (e.g., aggression, elopement risk), and/or health-related domains (e.g., tube feeding, seizure monitoring, tracheostomy care)
- Receive and use at least one funded regional center service — respite and social-recreation funding are common ways families meet this requirement — at least once every 12 months
- Be ineligible for standard Medi-Cal because of family income
- Have personal income and resources that fall within the program’s own limits (more on this below)
Children under 3 can qualify too, even though families are sometimes told otherwise. Early intervention (Early Start) eligibility and regional center eligibility after age 3 run on different criteria, and a child under 3 can be evaluated for the waiver if their disability is expected to continue qualifying them for regional center services later.
This determination is renewed every year — it isn’t a one-time decision.
How Institutional Deeming Opens the Door to IHSS
IHSS is a Medi-Cal-funded program, and full-scope Medi-Cal is a prerequisite to apply. For families whose income disqualifies their child from standard Medi-Cal, institutional deeming is frequently the only realistic route onto Medi-Cal — and from there, onto IHSS.
It’s worth being precise about what institutional deeming does and doesn’t do. It gets your child onto full-scope Medi-Cal. It does not, by itself, determine how many IHSS hours your child receives, or whether IHSS approves your application at all. IHSS eligibility and hours are decided separately, through a county social worker’s in-home functional needs assessment. Institutional deeming clears the Medi-Cal gate; the IHSS assessment is a different gate, evaluated on your child’s actual daily care needs.
How to Apply, Step by Step
- Your regional center service coordinator refers your child for the HCBS-DD waiver once it’s clear your family’s income puts standard Medi-Cal out of reach.
- You’ll receive a paperwork packet from your county Medi-Cal office. Most of it exists to document that your family’s income is too high — you’ll typically submit pay stubs, bank statements, or tax documents.
- You’ll complete Form DS 2200, checking option C in Section III (“Services/Living Arrangement”) and writing “family home” if your child is staying home, which confirms this is a Medi-Cal eligibility determination, not a placement referral.
- Your child’s own income and resources are verified separately and must fall within program limits.
- The county eligibility worker applies institutional deeming rules and determines whether your child qualifies for no-cost or share-of-cost full-scope Medi-Cal under a specific aid code tied to the waiver.
- Ask your service coordinator whether your regional center has a designated Medi-Cal specialist — many do, and they can walk you through the packet.
Renewal happens every year. Your county will ask for updated income information and a signed, dated copy of DHCS Form 7096, the regional center’s confirmation that your child remains an active client using waiver services. Some regional centers submit this automatically; others expect the parent to request it. Either way, confirm the form carries both a signature and a date — missing dates are a common, avoidable cause of renewal delays.
2026 Update: The Asset Limit Is Back
The Asset-Limit Rules, in Order
- 2021
AB 133 signed — sets a two-phase plan to raise, then eliminate, Medi-Cal's asset limit.
- July 2022
Phase 1: asset limit raised to $130,000 for one person.
- January 2024
Phase 2: asset limit eliminated entirely for non-MAGI Medi-Cal, including the DD Waiver.
- June 2025
AB 116 signed — reinstates the asset limit, citing the state budget deficit.
- January 1, 2026
Reinstated limit takes effect: $130,000 (plus $65,000 per additional household member). DD Waiver aid codes 6V/6W are explicitly included per DHCS ACWDL 25-14.
This is the part of institutional deeming that changed most recently, and it’s worth flagging clearly because the rules moved twice in four years.
Between 2022 and 2024, California phased out Medi-Cal’s asset test entirely, becoming the first state to do so for all Medi-Cal programs. As of January 1, 2024, income was the only thing that mattered for most Medi-Cal eligibility, including for children on the HCBS-DD waiver.
That changed again. Citing the state budget deficit, the Legislature passed Assembly Bill 116 in June 2025, reinstating the asset limit for non-MAGI Medi-Cal programs — the category that includes the DD Waiver — effective January 1, 2026. DHCS confirmed in All County Welfare Directors Letter 25-14 that the DD Waiver (aid codes 6V and 6W) and the related Home and Community-Based Alternatives Waiver (6X and 6Y) are both subject to the reinstated test. As of this writing, the limit is back in effect.
The reinstated limit is $130,000 in countable assets for one person, plus $65,000 for each additional household member, up to ten people. A home your child lives in, one vehicle, and ordinary personal belongings are exempt; a second property, extra vehicles, and most savings and investment accounts count.
One point of confusion worth heading off: this asset test applies to your child’s own resources, not yours. Institutional deeming’s core protection — that your family’s income and assets aren’t counted — is unchanged. What’s back is the requirement that your child’s own countable assets stay under the limit, which matters most for children who have savings in their own name, an inheritance, a settlement, or a special needs trust or ABLE account that isn’t structured to be exempt.
If your child is already enrolled, you don’t need to do anything right now. DHCS has said existing enrollees won’t be asked to verify assets until their first Medi-Cal annual renewal that falls in 2026 or later. New applications submitted from January 1, 2026 onward must include asset information up front. If a family is discontinued solely for missing asset paperwork, there’s a 90-day cure period to submit it and have coverage restored retroactively.
If your child’s own assets are approaching $130,000, this is a good moment to talk to your regional center’s Medi-Cal liaison or a special needs planning attorney about an ABLE account or special needs trust, both of which can hold assets without counting against Medi-Cal eligibility when properly structured.
2026 Asset Limits by Household Size
Source: DHCS All County Welfare Directors Letter 25-14, effective January 1, 2026. Applies to your child's own countable assets under institutional deeming — not your family's.
| Household size | Asset limit |
|---|---|
| 1 person | $130,000 |
| 2 people | $195,000 |
| 3 people | $260,000 |
| 4 people | $325,000 |
| 5 people | $390,000 |
| 6 people | $455,000 |
| 7 people | $520,000 |
| 8 people | $585,000 |
| 9 people | $650,000 |
| 10 people | $715,000 |
What's Different for Families in the Self-Determination Program
The Self-Determination Program (SDP) changes how your family manages regional center services — you get an individual budget, choose your own providers, and work with a Financial Management Services vendor instead of using regional center vendors directly. It does not change the underlying rules for institutional deeming. The eligibility criteria above — age, diagnosis, support needs, service use, income, and now assets — are identical whether your child receives services through the traditional model or through SDP.
What does change is the paperwork behind the scenes. When your child enrolls in SDP, their Medi-Cal waiver linkage moves from the HCBS-DD waiver to a separate, SDP-specific 1915(c) waiver. DDS and regional centers generally manage this switch administratively once you transition into SDP, and most families never see it happen directly. Still, it’s worth confirming with your service coordinator that the switch was completed and that your annual DHCS 7096 renewal is still being filed correctly, since a gap here could interrupt Medi-Cal coverage rather than just SDP services.
Two other things are worth knowing if you’re in SDP. First, IHSS remains completely separate from your SDP individual budget — DDS is explicit that SDP funds cannot pay for services IHSS already covers, and families must use IHSS as a “generic resource” before drawing on their SDP budget for overlapping needs. Second, if your family is just starting SDP, note that as of April 1, 2026, the California State Council on Developmental Disabilities (SCDD) became the only approved provider of the mandatory SDP orientation statewide — a scheduling detail, not an eligibility one, but worth knowing if you’re timing your transition.
At a Glance: HCBS-DD Waiver vs. SDP Waiver
| Feature | Traditional (HCBS-DD) | Self-Determination (SDP) |
|---|---|---|
| Deeming eligibility rules (age, diagnosis, support needs, income, assets) | Same criteria | Same criteria |
| Who provides services | Regional centervendored providers | Participant's choice, via individual budget |
| Medi-Cal waiver linkage | HCBS-DD waiver | Separate SDP-specific 1915(c) waiver |
| Institutional deeming available | Yes | Yes |
| Relationship to IHSS | Separate program; Medi-Cal is the prerequisite | Separate program; still a “generic resource” used before SDP funds |
| Annual DHCS 7096 renewal | Required | Required — confirm it's filed under the correct waiver after transition |
It's Here For Your Family
Institutional deeming exists because Medi-Cal recognized decades ago that a family’s paycheck shouldn’t be the reason a child with significant support needs goes without care that Medi-Cal-funded, community-based services like IHSS were built to provide. The rules around it move — the asset test proves that — but the core protection for your family’s own income and resources hasn’t changed. If you think your child might qualify, the fastest way to find out is to ask your regional center service coordinator to start a referral. If your income already disqualifies your child from standard Medi-Cal, this is very likely your fastest route onto full-scope coverage.
Bring This to Your Next Intake or Renewal Meeting
A working checklist — print it, screenshot it, or check items off as you confirm them.
- Which two or more support-need domains does my child qualify under, and how is that documented?
- Which regional center service will count as our one funded, used service this year?
- Is our DHCS Form 7096 signed and dated for this renewal cycle?
- What are my child's current countable assets, and are we near the $130,000 limit?
- If we're in the Self-Determination Program, has our Medi-Cal waiver linkage moved to the SDP-specific waiver?
- Does our regional center have a designated Medi-Cal specialist who can review our packet before we submit it?
