Federal Audits Demand California Repay Over $1 Billion in Misused Medicaid Funds for Illegal Aliens
An additional 2024 federal audit found the state improperly claimed $52.7 million in reimbursements for payments to illegal aliens
By Megan Barth, January 19, 2026 2:03 pm
In a major escalation of federal oversight, audits by the Centers for Medicare and Medicaid Services (CMS) under the Trump administration have determined that California must repay more than $1 billion in improperly claimed federal Medicaid funds tied to healthcare for illegal aliens. The findings highlight California’s role as the “biggest culprit” among several blue states—including Illinois, Washington, Oregon, Colorado, and the District of Columbia—that collectively face demands to return $1.35 billion in questioned reimbursements.
The revelation, first highlighted in a Fox News alert on Monday, underscores the ongoing fiscal strain caused by the state’s decision to extend full Medi-Cal coverage to all “undocumented migrants”, a move that has ballooned costs to the near point of fiscal insolvency.
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