California law sets a new MCO tax for 2027 through 2029
Issue
Governor Newsom signed SB 125 on June 29, 2026, as Chapter 24, creating an MCO tax outside Proposition 35 for 2027 through 2029. It charges plans $8.85 per enrollee per month once federally approved or certified as permissible.
Revenue goes to a new Medi-Cal Stability Fund, which also helps pay primary care and outpatient mental health rates.
Sources for this story
California Legislative Information (SB 125, Chapter 24, Statutes of 2026)Part of
- California's budget, the health plan (MCO) tax and Proposition 35
The health plan (MCO) tax and Proposition 35
- Medicaid financing and eligibility operations
Provider taxes and state-directed payments
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FQHC Talent. (2026, June 29). California law sets a new MCO tax for 2027 through 2029. Source: California Legislative Information (SB 125, Chapter 24, Statutes of 2026). Retrieved November 11, 2026, from https://www.fqhctalent.com/intel/ca-sb-125-mco-tax-2027-2029-enacted-jun-2026