What Proposition 56 Means for Denti-Cal and Medi-Cal Doctor Loan Forgiveness

If you’re a doctor or dentist with six-figure student loan debt in California, you could win the student loan debt lottery. Not a literal lottery, but California’s new student loan forgiveness program. Proposition 56 (Prop 56) — Denti-Cal and Medi-Cal’s new funding source — is being routed straight into loan forgiveness to help ensure better care for patients.

Proposition 56 Denti-Cal and Medi-Cal loan repayment program

Prop 56 is actually a tobacco tax for the state of California. Funds from this tax are being funneled to the Department of Health Care Services (DHCS). It has teamed up with Physicians for a Healthy California (PHC) to put the loan forgiveness program in place through CalHealthCares.

The official name of the program is Proposition 56 Medi-Cal Physicians and Dentists Loan Repayment Act Program (LRP). Even though the name Medi-Cal is listed, Denti-Cal is the name of Medi-Cal dentist services.

California recognized the need for qualified dentists and physicians to serve Medi-Cal patients.  This is defined in the eligibility criteria covered below.

Prop 56 could wipe out $300,000 of your student loan debt

Prop 56 payments to the loan program are generous for those who are eligible. You must work full time to get the full reward. If you work part time, you could qualify for half of the total amount.

• Physicians may apply for loan repayment up to $300,000 in exchange for a five-year service obligation.
• Dentists may apply for either a loan repayment up to $300,000 in exchange for a five-year service obligation, or
• A practice support grant up to $300,000 in exchange for a 10-year service obligation.

CalHealthShares accepts applications annually. The number of accepted applicants may fluctuate. In April 2019 ( the first cycle), 127 physicians and 20 dentists were accepted.

Eligibility requirements for the Prop 56 LRP

The good news is that all medical and dental specialties are eligible. The program supports both new grads and those already serving Medi-Cal or Denti-Cal patients.

Each awardee is required to maintain a patient caseload of 30% or more Medi-Cal/Denti-Cal patients. All participants must practice in the state of California and agree to serve for five years.

For physicians interested in the Prop 56 LRP

Physicians must meet the following criteria to apply:

• Have an unrestricted license and currently be in good standing with the Medical Board of California and/or the Osteopathic Medical Board of California
• Be an active enrolled Medi-Cal provider without existing suspensions, disbarments or revocations, or have submitted an application to become a Medi-Cal provider
• Have graduated from an approved residency program and/or completed a fellowship within the last five years
• Have existing educational loan debt incurred while pursuing a medical degree
• Not be currently participating in another loan repayment program

Because you can’t take part in any other loan repayment program, you might want to compare Public Service Loan Forgiveness (PSLF) eligibility with the Prop 56 LRP. The latter will require you to work in underserved areas, which may not be your dream job.

For dentists interested in the Prop 56 LRP

For dentists, your list of criteria is based on which part of the program you want to take advantage of.

If you want to apply for the loan repayment program, you must meet the following criteria:

• Have an unrestricted license and currently be in good standing with the Dental Board of California
• Be an active enrolled Medi-Cal provider without existing suspensions, disbarments or revocations, or have submitted an application to become a Medi-Cal provider
• Have graduated from dental school, residency, and/or dental fellowship within the last five years
• Have existing educational loan debt incurred while pursuing your dental degree and/or dental residency
• Not be currently participating in another loan repayment program

If you’re a dentist who wants to take advantage of the practice support grant, you must meet the above criteria, as well as the following:

• Not be currently participating in another practice support grant
• Relocate your current practice to establish a new Medi-Cal Dental office in one of the targeted counties

Relocating can be a big step, but the opportunity to pay off this much debt will help both your dentistry and patients in need.

Even if you just finished your fellowship, you can still apply. You’ll need to submit a recommendation letter, though. Physician or dentist, it’s a huge amount of loan forgiveness. But this is actually an even more important opportunity to look into for dentists.

Ask Me About Your Dental Student Loans

Proposition 56 is a big deal for dentists

The California Dental Association (CDA) is “enthusiastic” about the proposition. It’s a good incentive to bring dental care to an area of need.

The CDA touts this as being an essential loan repayment program. It currently offers a CDA loan repayment grant that’s worth half of the Proposition 56 award and requires three years of service.

The possibility of six-figure loan forgiveness is especially exciting for dentists. The average debt carried by a 2018 graduating dentist is $285,184. If you could qualify for the $300,000 offered with Proposition 56, your debt could be eliminated in five years.

Not only this, but dentists don’t qualify for PSLF if they own their own private practice. PSLF is a major federal loan forgiveness program that many physicians are counting on. You must work at a government agency or not-for-profit to be eligible. This cuts out a lot of dentists, making the Prop 56 LRP even more of an incentive for them.

Is the Proposition 56 LRP as short-lived as a Tootsie Pop?

The scoop on the money is that the DHSC only received a one-time allocation for the LRP. Physicians and dentists serve five years — but the question is, will the funds run out after that? Or will they renew?

The Budget Act of 2018 gave a specified portion of money from Proposition 56 tobacco tax revenue to the DHCS. It is to use these funds in non-federal health care expenditures. The Prop 56 LRP was given $220 million for recently graduated physicians and dentists. The physician portion of the LRP was given $190 million, while the dentist LRP was awarded $30 million.

The year 2019 was the first annual cycle. There’s approximately $41.8 million available every cycle, but the program is set to run for only five years (cycles) total.

Fewer people knew about Prop 56 the first year it rolled out. So you can expect the competition to increase over the five-year period. Even so, if each cycle awards a similar number of doctors and dentists, California should see a big influx in Medi-Cal care across the state.

Approximate number of dentists awarded each cycle	Number of awards over five years	Amount paid out over five years
147	147 x 5 = 735 awards	735 x $300,000 = $220,000,000

The $220 million is way above the allocated amount for the LRP. So it’s safe to say that either the number of participants will decrease or the amount awarded may be reduced (or both). Of course, not all participants are going to have exactly $300,000 of student loan debt. But physicians and dentists typically get pretty darn close.

This makes the Prop 56 LRP even more like a disappearing Tootsie Pop. If the tobacco tax continues, there may be more funds at the end of five years for the program to continue. Yet, it’s a tobacco tax, and hopefully, people will consume less of this product over time.

Not saying you shouldn’t give the Prop 56 LRP a chance, but your chances really are a bit like a lottery for this loan forgiveness program.