Budget documents show how much the state expects to save by lowering the savings cap for older and disabled Medi-Cal enrollees, and how little it has disclosed about who will lose coverage.
When the leaders of the California Senate and Assembly announced their budget agreement in June, the summary posted by Senator John Laird, the Santa Cruz Democrat who leads the Senate Budget and Fiscal Review Committee, listed a health item under the heading “Rejects immediate Medi-Cal asset limit cuts.” A statement in the same release said the agreement “rejects the proposed Medi-Cal asset test.”
The same summary explained what that meant. There would be no change in the current fiscal year, and the asset limit “would be lowered to $21,000 in 2027-28, instead of moving to the Governor’s proposed $2,000 limit now.”
That provision is now law. Starting July 1, 2027, Californians who are 65 or older, who have disabilities or who live in nursing homes will be ineligible for Medi-Cal if they hold more than $21,000 in countable assets, or $31,000 for a couple, under Senate Bill 164, the health trailer bill that was chaptered on June 29 as Chapter 27 of the Statutes of 2026. Today the limit is $130,000 for one person.
A review by The Inquirer of the budget record, including analyses by the nonpartisan Legislative Analyst’s Office, the governor’s proposed bill language and the Department of Health Care Services’ own guidance, shows that the state has put a dollar figure on the savings from the lower limit but has not published an estimate of how many people it expects to lose coverage. CalMatters reported this week that “the state never released budget estimates before lawmakers approved the $21,000 limit.”
What the law does
The asset test applies only to Medi-Cal enrollees whose eligibility is not determined under the federal “modified adjusted gross income” rules that govern most working-age adults and children. In practice, that means older adults, people with disabilities, nursing home residents and some families who qualify by spending down income on medical bills.
Beginning July 1, 2027, the limit will be $21,000 for a household of one, $31,000 for two and $1,550 more for each additional member, up to 10, according to the Legislative Counsel’s digest of SB 164 and the department’s frequently asked questions.
A primary home and a primary vehicle do not count, nor do household goods or retirement funds from which a person is receiving regular payments, the department says. Bank accounts, cash, second homes and second cars do. CalMatters reported that certain retirement accounts, life insurance policies and burial plots can also count. Applicants must still meet Medi-Cal’s income limit, about $1,800 a month for a single person.
People already enrolled will face the test when they renew their coverage, the department says, and those over the limit at renewal may lose coverage. The department’s guidance suggests that enrollees over the limit may want to spend some of their money or transfer some assets out of their name, though for people who later need nursing home care, transfers made on or after Jan. 1, 2026, can trigger a penalty that delays coverage.
Four changes in five years
The $21,000 limit is the latest turn in a policy California has reversed repeatedly.
For decades, the limit was $2,000 for an individual and $3,000 for a couple, an amount that dated to 1989, CalMatters reported in 2025. The state raised it to $130,000 and $195,000 in July 2022, then eliminated it in January 2024, according to the analyst’s office.
The elimination worked as intended and cost more than expected. The analyst’s office found that it was “particularly effective at extending Medi-Cal coverage to seniors,” adding about 100,000 seniors to the rolls by January 2025, but “more costly than originally anticipated.” Michelle Baass, the director of the Department of Health Care Services, told CalMatters last year that 112,000 to 115,000 people had enrolled, compared with early estimates of about 40,000.
In May 2025, facing a budget shortfall, Gov. Gavin Newsom proposed returning to the $2,000 limit. Lawmakers refused and agreed instead to restore the $130,000 limit beginning Jan. 1, 2026.
In this year’s May Revision, Mr. Newsom proposed $2,000 again, this time beginning in January 2027. The Department of Finance’s proposed trailer bill language would have set the limit at $2,000 for one person and $3,000 for two, with existing enrollees subject to it at their first annual renewal on or after the start date.
The administration estimated that change would save $215 million from the state’s general fund in 2026-27 and $321 million a year after that, and that Medi-Cal enrollment would fall by about 26,000 people in the first year, the analyst’s office wrote in its May review. CalMatters reported that the Department of Finance estimated 62,000 seniors and people with disabilities would lose coverage over two years at the $2,000 level.
The analyst’s office called the savings estimate “generally reasonable” but said the proposal “raises trade-offs in terms of access to care.” Among the questions it suggested lawmakers put to the administration: “Would a different asset limit mitigate some access impacts while also achieving needed budget savings?”
The Legislature’s answer was $21,000, a year later.
What the state expects to save
The budget record contains a savings estimate for the new limit, though it is spread across two programs.
In its review of the enacted health budget, published this fall, the analyst’s office said the lower limit “provides General Fund savings of $236 million in 2027-28 and $257 million in 2028-29 and ongoing” in Medi-Cal.
Because Medi-Cal eligibility also determines eligibility for In-Home Supportive Services, the program that pays caregivers to help older and disabled people stay in their homes, the cut produces separate savings there. The analyst’s office’s human services review estimated those at $112.9 million in 2027-28, rising to $152.7 million in later years. Disability Rights California, which opposed the change, put the combined savings at $348.5 million in the first year and $407 million in later years.
Those figures permit one comparison. The administration’s $2,000 proposal was projected to save $321 million a year in Medi-Cal once fully in effect; the $21,000 limit is projected to save $236 million in its first full year and $257 million after that, according to the analyst’s office. By that measure, a limit more than 10 times as high is expected to produce roughly three-quarters or more of the Medi-Cal savings.
The savings estimates rest on assumptions about how many people will leave the program, and how sick they are. Those assumptions have not been made public in the documents The Inquirer reviewed, and the analyst’s office’s published reviews of the final budget do not include a caseload estimate for the $21,000 limit.
What the first test has shown
There is one early data point, and it raises its own questions.
When the state restored the $130,000 limit in January, the administration estimated the change would save $349 million in 2026-27, according to a table in the analyst’s office’s March analysis of the Medi-Cal budget.
About 600 people lost Medi-Cal when the state reinstated the $130,000 limit, CalMatters reported, citing state data. The two figures are not directly comparable: the savings estimate covers a full fiscal year, enrollees are tested only as they come up for renewal, and the 2026 changes also included new penalties on asset transfers by people seeking nursing home coverage. But the state has not published a reconciliation of the two.
The new law requires that kind of disclosure going forward. Budget legislation directs the Department of Health Care Services to publish, every quarter, the number of enrollees who lose eligibility because of the asset limit, the analyst’s office noted. The administration’s own proposed language this spring would have directed the department to consult with stakeholders on what to report, “including, but not limited to, the reasons for termination.” The Inquirer did not find a published quarterly report of asset-limit terminations on the department’s website.
Who pays
The people subject to the test are, by definition, low-income: they must meet the income limit regardless of savings. For many, the test determines not only access to doctors but also whether Medi-Cal pays for daily caregiving.
Julia Feinberg, 37, an Oakland therapist with a degenerative neuromuscular disorder, told CalMatters that she relies on about 19 hours of Medi-Cal-funded caregiving a day and would otherwise be confined to a nursing home. She would have to spend about $10,000 to get under the new cap. “We keep having to have the same fight over and over and over again,” she said.
Camille Nguyen, a lawyer with the Legal Aid Society of San Mateo County, told CalMatters that most of the clients who struggle to stay under the limit hold their savings in cash rather than in a house. “That’s their retirement,” she said.
Advocates for the test’s elimination have argued that it can cost the state more in the long run if people who lose home care end up in nursing homes. CalMatters reported in 2025 that the state pays on average more than $114,000 a year per person for nursing home care, according to Justice in Aging, a national advocacy group, compared with an average of $25,400 a year for in-home care. The analyst’s office has not published an estimate of such offsetting costs for the $21,000 limit.
The administration’s case
The administration’s argument for the asset test has been consistent: the elimination drew far more enrollees than projected, and seniors and people with disabilities are among Medi-Cal’s most expensive members. The analyst’s office has written that eliminating the test, along with expanding coverage to undocumented immigrants, had “a relatively large General Fund impact” because of “higher utilization of more costly services by seniors and persons with disabilities.”
The cut is also one piece of a much larger contraction. The federal budget law President Trump signed in 2025, known as H.R. 1, imposes work requirements and more frequent eligibility checks on many adult enrollees, and experts estimate that federal and state cuts together will remove more than 2.2 million Californians from coverage over four years, according to CalMatters. Medi-Cal’s budget for 2026-27 is about $217 billion in total funds, the analyst’s office reported at the May Revision. The Legislature’s leaders said their agreement would delay or soften several health cuts and keep the budget balanced through the next two fiscal years.
What happens next
The limit will take effect under a new governor. Mr. Newsom leaves office in January, and the candidates to succeed him in the Nov. 3 election have taken different positions.
Steve Hilton, the Republican candidate, said in a statement to CalMatters that he opposes asset limits. “Seniors and people with disabilities shouldn’t lose their coverage because they’ve managed to save some money. They’ve done the responsible thing. Why punish them for it?” he said. He also criticized the state for extending Medi-Cal to immigrants without legal status.
Xavier Becerra, the Democratic candidate and front-runner, did not answer CalMatters’ specific questions about the limit. His spokesman, Johnathan Underland, blamed the Trump administration’s federal cuts for “squeezing” Medi-Cal and said he would be “focused on protecting access to care and demand savings that are real, measurable and sustainable.”
“We would love to see the asset test permanently taken off of the chopping block,” Lindsay Imai Hong of Hand in Hand, a caregiving advocacy group, told CalMatters.
The next decision point is the governor’s budget proposal in January 2027, followed by the May Revision, both of which will arrive before the $21,000 limit takes effect on July 1, 2027.
For enrollees, the department’s advice for now is brief: “Right now, you don’t need to do anything.”
For more on the state’s In-Home Supportive Services program, see The Inquirer’s coverage of the federal deferral of $1.2 billion in home-care reimbursements and of the attorney general’s fraud charges against 103 home-care workers.
Graham Ostrowski covers the governor, the Legislature, state agencies and the state budget for the Sacramento Report. More from Graham Ostrowski
