California Considers Reinstating Asset Test for Medi-Cal Eligibility Among Seniors and Disabled

Governor Gavin Newsom has proposed reinstating an "asset test" for certain Medi-Cal applicants, a move aimed at addressing California's projected $12 billion budget deficit. This test would require individuals applying for Medi-Cal—California's Medicaid program—to have assets below specific thresholds to qualify for benefits.

To balance the $321.9 billion budget, Newsom has proposed deep cuts to healthcare spending, disproportionately affecting Medi-Cal, California’s Medicaid program.

This reinstatement comes just two years after the state eliminated the asset test as part of its commitment to expand equitable healthcare access. Advocacy groups warn the return of asset limits will penalize people for saving modest amounts, discourage financial independence, and reintroduce bureaucratic complexity into the eligibility process.

What Is the Proposed Asset Test?

While the asset test would not affect all enrollees—most notably children, pregnant people, and those qualifying through expanded ACA-based eligibility—it could disqualify many seniors and disabled individuals who currently rely on Medi-Cal for critical services.

Under the proposal, individuals aged 65 and older or those with disabilities would be ineligible for Medi-Cal if their assets exceed: Calmatters, Familydocs.org, Fox News, Department of Health Care Services

• $2,000 for individuals

• $3,000 for couples

Assets considered in this asset test include:

• savings accounts,

• cash on hand,

• a second vehicle, and

• certain property holdings. 

  
  

Notably, the value of a primary residence and one vehicle would be excluded from this calculation. This policy is slated to take effect no sooner than January 1, 2026. 

Broad Cuts Undermine Medi-Cal Expansion and Equity Goals

The asset test is just one piece of a larger package of proposed cuts that advocates say will erode hard-won gains in California’s healthcare system:

• Freeze on new enrollment for full-scope Medi-Cal for undocumented adults beginning in 2026.

• $100 monthly premiums for undocumented enrollees starting in 2027.

• Elimination of dental and long-term care benefits for undocumented adults.

• Reduction in reimbursement rates to clinics serving undocumented individuals.

The budget also proposes removing acupuncture from optional benefits, restricting prescription drug access, and ending coverage for GLP-1 drugs for weight loss. The elimination of Prop 56-funded supplemental payments and workforce investments further threatens access in underserved communities.

Background and Rationale

California previously eliminated the asset test in 2024, allowing income-eligible seniors and individuals with disabilities to qualify for Medi-Cal without asset limitations. This change contributed to increased enrollment and higher program costs. The reinstatement of the asset test is projected to save the state approximately $94 million in the 2025–26 fiscal year, with savings expected to grow in subsequent years. 

Newsom also floats cuts to undocumented health care as budget deficit looms. San Francisco Chronicle

Potential Impact

Advocates for low-income and disabled Californians express concern that reinstating the asset test could force individuals to deplete their modest savings to maintain healthcare coverage, potentially exacerbating financial insecurity among vulnerable populations. For example, a quadriplegic woman who received an $8,000 inheritance would lose her Medi-Cal eligibility under the proposed asset limits. California Health Advocates, CalMatters

The proposal is part of broader budgetary measures, including freezing new Medi-Cal enrollments for undocumented adults and introducing premiums for certain enrollees, aimed at curbing the program's escalating costs. Associated Press

As the state legislature reviews the budget, the asset test proposal will be subject to debate and potential modification before any implementation.

Advocates Push Back

Organizations like the California Academy of Family Physicians (CAFP) are sounding the alarm. They argue that these cuts will destabilize access, worsen health disparities, and shift costs downstream to emergency services. By targeting undocumented communities and vulnerable populations, they say, the May Revision betrays the state’s previous commitments to health equity.

CAFP and allied groups are calling for the restoration of full-scope Medi-Cal coverage and the protection of workforce and primary care funding streams, urging the Legislature to reject measures that disproportionately harm those most in need.