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- Federal Law Changes and Verification Requirements
- How People Lose Coverage
- Who’s Most at Risk
- Impact on Hospitals
- What You Should Do Right Now
- Premium Increases for Covered California Enrollees
- Timeline: When Changes Take Effect
- State-Level Solutions Under Consideration
- The Broader Context: Federal Policy Shift
- How Federal Medicaid Funding Works
Approximately 3.4 million people could lose Medi-Cal coverage, and up to 660,000 could lose ACA Marketplace coverage—not because they no longer qualify, but because of federal changes to Medicaid funding and eligibility requirements. The cuts arrive with speed: some take effect this year, others in early 2027, and the process is already starting.
Two separate federal changes are creating this problem. California faces tens of billions in annual federal cuts. States must verify Medi-Cal eligibility every six months instead of annually.
People will lose coverage even though they still qualify—because they missed a deadline or didn’t get a notice.
If you’re on Medi-Cal right now, or someone in your household is, check your mailbox and update your address this week.
Federal Law Changes and Verification Requirements
Federal law changes have cut Medicaid funding. Working-age adults who qualified for Medi-Cal under the expansion will need to prove they still qualify more frequently than before. You have to prove you qualify for an exemption—the state won’t figure it out for you.
How People Lose Coverage
When it’s time to verify you still qualify for Medi-Cal, you receive a notice in the mail explaining you need to verify continued eligibility. The deadline is typically 30 to 45 days.
What you need to provide: recent pay stubs if you’re employed, usually from the past one or two months; proof of current address; Social Security number verification if it’s not already on file; a brief note explaining any changes to how much money you earn. For people claiming work requirement exemptions starting in 2027, a doctor’s letter confirming disability, proof you’re pregnant, school enrollment paperwork, or other evidence supporting exemption claims.
Consider a single parent working two part-time jobs—one in retail, one in food service—earning $1,850 monthly. That puts them right at the 138% federal poverty level threshold. In January, they receive a verification notice for June verification. Managing childcare and irregular work schedules, the notice sits unopened while they deal with a child’s illness requiring time off work.
By June, they get a notice saying coverage will end. They have 30 days to respond or lose coverage. They call their county eligibility office. The line is perpetually busy. By August, coverage terminates. Their income hasn’t changed. They still qualify. But they lost coverage because they didn’t complete the verification process.
Work requirements in other states have led to coverage losses. Studies showed most were working or qualified for an exemption—they simply didn’t complete the complex verification process. Those who lost coverage went into medical debt, delayed treatment, and got sicker. Work rates didn’t go up.
Who’s Most at Risk
Working parents face particular vulnerability. Healthcare experts warn that people risk coverage loss simply because they aren’t able to navigate a complex verification process in a timely way.
Immigrants in households with both documented and undocumented immigrants face compounded risk. Federal changes affect immigrant coverage. Preventive care, dental services, routine medical care—gone.
Rural populations face distinct challenges. Rural counties have fewer staff, older computer systems, and less help available to people applying for coverage. When rural residents lose coverage, it’s harder to get to specialists when you live far away, even if they eventually regain coverage.
Impact on Hospitals
When people lose Medicaid, they skip preventive care, stop taking medications, delay treatment, and end up in emergency rooms when problems get serious. Hospitals face financial losses when uninsured patients replace Medicaid patients. With 3.4 million people potentially losing coverage, hospitals could lose hundreds of millions of dollars per year.
Rural hospitals, which already barely break even, saw the biggest jump in uninsured patients. Small hospitals under 100 beds saw similar strain. Larger, investor-owned hospitals experienced more manageable impacts.
What You Should Do Right Now
First: verify your current coverage status and redetermination timeline. You can check your coverage status at MyBenefitsCalWIN.org or CoveredCA.com. Set a phone reminder or calendar alert for one month before any redetermination deadline.
Second: update your contact information with your county eligibility office or through the DHCS system immediately. Most people lose coverage because they never get the notice asking them to verify eligibility—it goes to an old address. If you’ve moved, changed phone numbers, or changed email addresses since 2020 or your last application, log into your account and update that information this week.
Third: start gathering documentation now. For employed people, keep the most recent two months of pay stubs in an accessible file. If you’re self-employed, maintain copies of recent tax returns and quarterly estimated tax payment receipts. If you receive income from Social Security, disability, unemployment, or child support, keep documentation showing the monthly amount. If your income sources have changed in the past six months, prepare a brief written explanation of the changes.
Fourth: know your appeal rights before you need them. If you get a notice saying your coverage is ending but you think you still qualify, you can request a hearing with a judge to review the decision. You have 90 days to appeal, but if you ask within 10 days to keep coverage while your appeal is reviewed, your coverage stays active.
Many people who lose coverage could regain it by filing an appeal, but don’t know this option exists. Contact information for filing appeals is available on Covered California’s website and through the DHCS Medi-Cal help system. Free legal aid programs and health consumer advocacy organizations like Central California Legal Services provide free guidance on appeals.
Fifth: consider enrollment assistance if you’re uncertain about your eligibility or coverage options. Covered California has trained counselors who help people for free with applications and understanding eligibility. Find a local enrollment counselor through Covered California’s website or by calling 1-888-402-0737.
Premium Increases for Covered California Enrollees
While Medi-Cal recipients face verification requirements and work mandates, Californians who purchase coverage through Covered California are confronting a different crisis: premiums are skyrocketing because the federal government stopped paying as much of people’s insurance costs.
Governor Newsom’s proposed 2026-27 budget allocated $190 million to help mitigate these premium increases. Officials are replacing $2.5 billion in lost federal help with only $190 million of state money, affecting primarily the lowest-income Covered California enrollees.
If you lose Medi-Cal, you might qualify for cheaper insurance through Covered California if you earn between roughly $18,000 and $52,000 annually. The subsidy amounts are currently much lower than before enhanced subsidies expired, but some financial assistance remains available. Losing Medi-Cal lets you sign up for Covered California anytime, not during the normal signup period.
Timeline: When Changes Take Effect
Enhanced federal premium tax credits expired December 31, 2025. Covered California enrollees began facing substantially higher premiums in January 2026.
For Medi-Cal recipients, starting January 1, 2027, you’ll have to verify your eligibility twice a year instead of once. Counties are already starting to send verification notices in early 2026 to spread out the work. By mid-2026, counties will start sending notices asking people to verify eligibility for later in the year.
Congress requires states to add work requirements. The federal government will explain how by June 1, 2026. States must require new applicants to prove they work by January 1, 2027, though they can start earlier.
State-Level Solutions Under Consideration
Congress cut federal funding, and the state needs to spend its own money to keep people covered. Officials, healthcare providers, and policy experts are calling urgently for state-level response.
Officials are considering several ways to raise money. First, closing a tax loophole that lets big companies avoid paying taxes on money they earn overseas. This single loophole costs California approximately $4 billion annually in foregone corporate tax revenue. Closing this loophole for oil and gas companies alone could raise $75 to $146 million a year.
Second, a proposed ballot measure would tax people worth over $1 billion 5% on their wealth. Supporters say it could raise billions for healthcare, schools, and food assistance. State analysts think it could raise billions, but warn that some wealthy people might move out to avoid it.
Third, healthcare experts suggest using state power to control healthcare prices and spending. California’s new Office of Health Care Affordability can set limits on what hospitals and doctors charge—ways to save money without cutting services.
Some officials suggest kicking higher-income people off Medi-Cal or cutting less important benefits to protect the poorest. This goes against the state’s 20-year push to cover more people, but some officials say it might be necessary unless new money is found.
The Broader Context: Federal Policy Shift
What Californians are experiencing reflects a major change in how the federal government thinks about healthcare. For the past 12 years, federal policy tried to get more people health insurance. The uninsured rate dropped from 20% to 8%—that’s 12 million more people with health insurance.
The 2025 law cuts federal Medicaid funding and makes states responsible for deciding who gets coverage. The state expanded coverage more than the federal government required, so the cuts hit harder. Medi-Cal covers 15 million people—half of all children and one in five working adults. Keeping that coverage means spending state money to replace federal funding.
When people lose coverage, they get sicker and die more often. They end up in hospitals with preventable diseases and get diagnosed late, which costs more to treat. People are losing coverage not because they don’t qualify, but because the verification process is too complicated.
The state’s choices will determine whether 3.4 million people keep coverage. Officials must find new money, protect vulnerable people, and improve the enrollment process.
If you’re on Medi-Cal, check your address on file this week. Keep your pay stubs. Know your redetermination date. The system is changing whether you’re ready or not.
How Federal Medicaid Funding Works
The federal government doesn’t give states a fixed amount of money. Instead, it matches what states spend based on a formula. For every dollar the state spends on Medi-Cal, the federal government contributes about 50 cents. That’s California’s Federal Medical Assistance Percentage, or FMAP. Poorer states get more federal money—Mississippi gets 76 cents for every dollar it spends. Richer states like California get less.
This matching structure means when the federal government cuts its share, states face a choice: spend more of their own money to maintain coverage, or cut coverage. If the state wants to cover the same people with the same benefits, it must replace every dollar of lost federal funding with state dollars.
The expansion population—working-age adults earning up to 138% of the federal poverty level—historically received higher federal matching rates. The federal government paid 90% of costs for this group. Now Congress is reducing that percentage, forcing states to pay more.
When federal funding drops from 90% to 50% for the expansion population, the math becomes brutal. A program that cost the state $1 billion now costs $5 billion to maintain at the same level. A $30 billion annual federal cut doesn’t require California to spend $30 billion more—the matching formula means the state would need to spend roughly $15 billion more to fully replace lost federal funding and maintain current coverage levels.
Our articles make government information more accessible. Please consult a qualified professional for financial, legal, or health advice specific to your circumstances.