In May 2025, Governor Gavin Newsom proposed significant cuts to health and human services to address a projected $12 billion deficit in California’s budget for 2025-2026. These included potentially devastating cuts to In-Home Supportive Services (IHSS) and Medi-Cal. 

On June 13, 2025, the California Legislature passed SB 101, its budget bill for 2025-2026. The Legislature’s version of the budget rejected many of the cuts proposed by the Administration. 

On June 26, 2025, Disability Rights California held a town hall to discuss the budget proposals and how they may affect people with disabilities who rely on IHSS and other in-home supports.  

What was covered in the Town Hall:  

• Changes the Administration proposed to IHSS and Medi-Cal and which proposals were accepted and rejected.   
• How changes may affect IHSS recipients who also get in-home services from other programs, such as the Home and Community-Based Alternatives (HCBA) waiver or the regional center system. 
• Ways for the community to advocate for what’s important to them and steps people can take to influence the state budget process.

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FAQ 

The Legislature and Governor have agreed on the final budget bill, what happens now?

On June 24, 2025, the California Governor, Assembly and Senate reached a final budget deal1 for the FY 2025-26 state budget.​ We now have a good idea about how IHSS and Medi-Cal programs will be affected in the coming year.

More specifics, such as funding details, will be determined in multiple other bills. Several bills have already been released, but we are still waiting for others.​ These additional bills are not subject to the June 15, 2025 legislative deadline and will likely continue to be worked on into the new fiscal year.

What are some changes to IHSS and Medi-Cal?

Enrollment Freeze for Adults with Certain Immigration Statuses

There will be a Medi-Cal enrollment freeze for individuals with unsatisfactory immigration status, ages 19 and older, beginning January 1, 2026. 

There will be a three-month “grace period” allowing for re-enrollment. After that, new UIS enrollees will be unable to receive Medi-Cal coverage, including IHSS.

• Q: I am a current Medi-Cal enrollee with unsatisfactory immigrant status, am I going to lose my coverage?
  • No, this freeze only applies to new enrollees. Individuals with unsatisfactory immigration status who are already enrolled in Medi-Cal before January 1, 2026 will not lose access to Medi-Cal/IHSS. However, new monthly premiums may apply (see following section).
• Q: What exactly does “Undocumented Immigrant Status” mean?
  • The specific definition isn't clear yet.  The exact definition will hopefully be determined in the trailer bills that are going to be passed in the coming weeks. 
• Q: If I have unsatisfactory immigrant status and lose Medi-Cal for a non-immigration related reason, will I be able to re-enroll?
  • You will have a 3 month grace period to re-enroll. If you do not re-enroll within 3 months of the termination date, you will lose access to Medi-Cal because of the freeze. 

Monthly Premiums for Adults with Certain Immigration Statuses

Adults with unsatisfactory immigrant status aged 19 to 59 years old will be required to pay $30 monthly premiums to receive full-scope Medi-Cal coverage, effective July 1, 2027. 

Beginning July 2026, Medi-Cal coverage for UIS adults will not receive Medi-Cal dental benefits. 

Reinstating Medi-Cal Asset Limit 

The Medi-Cal asset limit will be reinstated to $130,000 for individuals and $195,000 for couples, and $65,000 for each additional household member. This is the same limit that was set in 2022.

• Q: If I lose eligibility for Medi-Cal, would I also lose my IHSS eligibility?
  • Yes, your IHSS eligibility is contingent upon your Medi-Cal eligibility; if you lose one, you lose the other. So, if you were terminated from Medi-Cal, you would be automatically terminated from the IHSS program as well. 
• Q: Are there any assets that are excluded from the asset limit, like vehicles, retirement accounts, and other physical assets?“Assets” may be resources or property, including:
  • Personal Property
    • E.g. cash and savings 
  • Real Property
    • E.g. houses and vehicles
      • NOTE: The proposed asset limits only apply to second vehicles and homes, so your first vehicle (per household) and home will not be counted toward the asset limit.
• Q: Can anyone with a disability put assets in a special needs trust, and how does that affect my Medi-Cal eligibility?
  • A Special Needs Trust (SNT) allows for a disabled person to maintain his or her eligibility for public assistance benefits such as Medi-Cal, despite having assets that would otherwise make the person ineligible for those benefits. 
  • There are two main types of SNTs, and there are specific guidelines for each type of SNT.
    • For more information on the requirements, visit DHCS’ page here: Special Needs Trust.
    • Additionally, the attorneys at California Advocates for Nursing Home Reform (CANHR) offer resources to help disabled clients set up a first party special needs trust or help loved ones to set up a third party special needs trust on behalf of the disabled person: Attorneys for Special Needs Trusts - CANHR
• Q: Can I make a CalAble account instead of setting up a special needs trust?
  • For information on CalAble: How is this different from a Special Needs Trust or Pooled Trust? - CalABLE

What happened to the proposed Provider Hour Limit?

The Governor’s proposed budget capped IHSS provider overtime and travel hours at 50 hours per week, beginning 2025-26. 

However, the final budget does not limit provider hours. Current work week limits will continue to apply. ​

How will the federal budget reconciliation bill affect California?

• Q: Will Governor Newsom adjust the California budget based on federal cuts to Medicaid? 
  • Yes, the federal cuts to Medicaid will have a major impact on California’s budget. The Governor recently estimated that California would lose $30 billion in federal funding.  
  • When faced with a budget shortfall, the state has two choices: 
    • The state can cut spending, which often looks like cuts to social services. 
    • The state can find more revenue, such as through taxes or the rainy-day fund. 
  • Changes to state spending have to go through the state legislature. It is possible that even after the state budget is finalized, it will have to be modified in response to federal cuts. 
• Q: How will the Federal Budget Bill affect California’s Medi-Cal 1915(c) Waiver programs, like the Assisted Living Waiver program and the Home and Community Based Alternatives Waiver?  
  • The federal Medicaid cuts do not directly cut these programs. However, these programs are considered optional under federal Medicaid law. Therefore, if the state has less money to spend on Medicaid overall because of these federal cuts, the state may look to these “optional” programs to cut spending. 
  • We do not know yet if this will happen. However, we know that these programs provide essential services for many Californians, and we will monitor and, if needed, fight against cuts to these programs.  
• Q: Now that the budget’s been finalized, is there anything else I can do to advocate for the rights of the disabled community?
  • You can continue to engage state legislators to stress the importance of minimizing cuts to essential HCBS services in response to the cuts in the Federal Budget Bill. 
• Q: What other resources do you recommend? 
  • Advocacy Alerts – California Foundation for Independent Living Centers
  • Medicaid Defense - Resources and Analysis - National Health Law Program
  • First Look: Understanding the Governor’s 2025-26 May Revision - California Budget & Policy Center
  • Tracking the Medicaid Provisions in the 2025 Reconciliation Bill

• 1. See Assembly’s summary of the final budget deal; https://abgt.assembly.ca.gov/system/files/2025-06/floor-report-of-the-2025-26-budget-june-24-2025.pdf?utm_source=substack&utm_medium=email. See also Senate’s summary of the final budget deal; https://sbud.senate.ca.gov/system/files/2025-06/summary-of-the-budget-act-of-2025-final-1.pdf