What's Happening?
The Centers for Medicare & Medicaid Services (CMS) has issued new guidance that will result in thousands of individuals losing federally funded Medicaid or Children's Health Insurance Program (CHIP) benefits later this year. This change follows a law
passed in 2025 that restricts federal funding for certain noncitizens. The guidance specifies that federal Medicaid and CHIP matching funds will now only be available for U.S. citizens, nationals, lawful permanent residents, certain Cuban and Haitian entrants, and migrants residing under the Compacts of Free Association. Refugees, asylees, parolees, and survivors of trafficking who do not meet these criteria will be affected. States are required to update eligibility systems and notify affected enrollees by October 1, when the new rules take effect.
Why It's Important?
This policy shift could significantly impact the healthcare coverage of many noncitizens, potentially increasing the number of uninsured individuals in the U.S. The changes may place additional financial burdens on states with large immigrant populations, as they decide whether to provide state-funded coverage to those losing federal support. The CMS describes the guidance as necessary to enforce federal law and protect taxpayer-funded healthcare programs. However, the decision could lead to increased healthcare costs for states and reduced access to healthcare services for affected individuals.
What's Next?
States must conduct eligibility redeterminations and update their systems to comply with the new rules by October 1. They will need to decide whether to use state funds to cover those losing federal support. The CMS will provide technical assistance and oversight to ensure compliance. The outcome of these changes will depend on how states choose to respond, potentially affecting thousands of residents' access to healthcare.
