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What CMS told states
On April 8, CMS sent state Medicaid directors a letter explaining how to carry out section 71109 of the 2025 reconciliation law. Beginning Oct. 1, 2026, federal matching funds for full Medicaid and CHIP benefits will be limited to citizens and nationals, lawful permanent residents, Cuban and Haitian entrants, and migrants from the Compact of Free Association nations, provided they meet other eligibility rules.
Groups that lose federal match for full benefits include refugees, asylees, most parolees, trafficking victims, certain other qualified immigrants and other lawfully residing noncitizens. Lawful permanent residents still in the five-year waiting period also fall outside the match unless an exception applies. CMS said it will not require states to fund state-only coverage for people who lose federal support.
What stays and what changes
Emergency Medicaid remains available to affected Medicaid enrollees. However, a companion provision sets federal matching for emergency services for noncitizens at the state’s regular rate starting Oct. 1, including for adults in the expansion group. That lower match could push some states to tighten how they pay for emergency care. CMS also told states to update supplemental payment methods for emergency services before Oct. 1.
States must review current enrollees, verify immigration status through the federal SAVE system, give people a 90-day window to resolve problems and send notice before ending coverage. Medicaid state plan amendments are due by Dec. 31, 2026.
Where hospitals feel it
Refugees, asylees and parolees tend to be concentrated in certain communities and metropolitan areas. Hospitals in those markets, especially safety-net hospitals, will see more patients move from full coverage to emergency-only Medicaid or no coverage. Outpatient follow-up, behavioral health and chronic disease care will become harder to fund.
- Size the population: Work with patient financial services to estimate how many current Medicaid patients hold an affected status.
- Engage your state: Ask how the state plans to handle redeterminations and whether it will fund any state-only coverage.
- Prepare front-line staff: Update financial counseling and charity care screening so patients losing coverage are not lost in the transition.
- Coordinate with community partners: Resettlement agencies and health centers can help patients find other coverage or care.
Archive entry for Apr 12, 2026, added Nov. 11, 2026.