By the Unified Savers Editorial Team
This information is based on California Welfare & Institutions Code, CDSS emergency fiscal alerts, and federal Medicaid legislative records. For case-specific advice, consult a legal aid attorney or your county IHSS ombudsman.
California’s Department of Social Services issued an emergency fiscal alert to county welfare directors on June 11, warning that a federal budget reconciliation package currently before the U.S. Senate could strip as much as $4.3 billion per year from California’s Medicaid (Medi-Cal) funding — a reduction that would force the state to make “severe and immediate” cuts to the IHSS program unless the Legislature acts to backfill the losses. This threat compounds the California 2026 budget pressure on IHSS funding already underway at the state level.
What the Federal Bill Contains
The reconciliation package, which passed the House in May and is now being debated by the Senate Budget Committee, contains three provisions directly threatening IHSS:
1. Federal Medical Assistance Percentage (FMAP) Reduction The bill proposes to lower California’s federal Medicaid matching rate from the current 50 percent to 47.5 percent for the HCBS (Home and Community-Based Services) waiver programs that partially fund IHSS. A 2.5-percentage-point FMAP reduction would cost California approximately $1.9 billion annually in lost federal matching funds for IHSS alone.
2. Per-Capita Cap on HCBS Spending The package includes a per-capita spending cap for Home and Community-Based Services, limiting the federal government’s share of spending to 2023 cost levels plus 2.5 percent annual growth. California’s IHSS costs have grown faster than that cap — roughly 5.8 percent annually since 2023 — meaning the state would absorb costs above the cap without federal matching. CDSS estimates this provision would cost California an additional $1.6 billion per year by fiscal year 2028.
3. Enhanced Eligibility Verification Requirements A third provision would require states to conduct quarterly — rather than annual — eligibility redeterminations for all Medicaid recipients, including IHSS care recipients. CDSS estimates compliance would require hiring approximately 1,800 additional county eligibility workers statewide at a cost of $800 million annually, or alternatively lead to coverage losses for an estimated 280,000 Medi-Cal enrollees who would lose IHSS eligibility during the more frequent redetermination process.
California’s Response
Governor Newsom directed the Department of Finance and CDSS to develop a contingency plan by July 1 outlining which IHSS program elements would be reduced first if the federal cuts are enacted. According to the CDSS emergency alert, the contingency analysis will examine three scenarios ranging from a 10 percent federal FMAP reduction to a full cap implementation.
Attorney General Rob Bonta announced June 12 that California is prepared to join a multistate legal challenge to the eligibility redetermination provisions, arguing they conflict with the Medicaid Act’s continuous coverage requirements. Nineteen states have already formed a coalition to contest the measure.
The California Legislature’s Joint Legislative Budget Committee voted 8–4 on June 13 to authorize the Governor to draw on the state’s Rainy Day Fund — currently at $22.3 billion — if federal cuts are enacted before a permanent solution is found.
What It Means for IHSS Recipients and Providers
The most immediate risk for care recipients is the enhanced eligibility verification requirement. If California implements quarterly redeterminations to retain federal Medicaid funds, recipients who miss a redetermination mailing or face bureaucratic delays could lose IHSS eligibility and have services suspended while their cases are reviewed. Disability rights advocates warn that recipients with cognitive impairments or those experiencing housing instability are especially vulnerable to losing coverage through administrative error.
For providers, the threat is indirect but real: if the state is forced to reduce IHSS authorized hours or tighten eligibility criteria to stay within a federal spending cap, providers would see reduced hours available to work. Providers should review their IHSS caregiver rights and understand the IHSS fair hearing process in case hours are reduced and an appeal becomes necessary. In a worst-case scenario modeled by the UC Berkeley Labor Center, approximately 47,000 IHSS provider jobs statewide could be eliminated by 2028 if the full suite of cuts takes effect.
What Advocates Are Doing
SEIU 2015, Disability Rights California, and the California In-Home Supportive Services Consumer Alliance are coordinating a joint federal advocacy effort, scheduling meetings with all California members of the Senate Finance Committee during the July recess. Recipients and providers are being urged to contact their U.S. senators directly — the California Senate switchboard is (202) 224-3553.
CDSS will host a public webinar on the federal reconciliation bill’s impact on July 8 at 2 p.m. Registration information will be posted to cdss.ca.gov.
Related guides: Federal Medicaid Cuts and California IHSS · California 2026 Budget and IHSS Funding · IHSS Caregiver Rights · Get Free IHSS Updates