DHCS says California's current MCO tax holds through December 31, 2026
Issue
California's budget, the health plan (MCO) tax and Proposition 35Taking effect
Next: · California's current MCO tax reaches the end of its authorized term
DHCS says the February 2026 CMS final rule leaves California's current Managed Care Organization tax in place through December 31, 2026. After that date the same tax structure will no longer qualify for federal approval, and DHCS is working with partners on a successor tax.
There is no June 30 cliff.
Key points
- DHCS says the current tax remains intact through December 31, 2026; there is no live June 30 transition cliff.
- The same structure is not federally approvable after year-end, so successor-tax and payment-methodology planning remains urgent.
- Remove the retired June gap of about $1.1 billion from forecasts, and plan for the December 31 transition.
Sources for this story
California Department of Health Care ServicesPart of
- California's budget, the health plan (MCO) tax and Proposition 35
The health plan (MCO) tax and Proposition 35
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FQHC Talent. (2026, July 6). DHCS says California's current MCO tax holds through December 31, 2026. Source: California Department of Health Care Services. Retrieved November 11, 2026, from https://www.fqhctalent.com/intel/ca-mco-tax-cms-june-30-transition-cliff-2026