CMS and HHS say states must limit full Medicaid and CHIP eligibility for some lawfully present immigrants starting Oct. 1, 2026.
Why it matters: The change could reduce coverage for immigrants who have been eligible for state-funded full benefits, shifting more costs and administrative burden to states. Employers and hospitals may also face more uninsured patients and more pressure on local safety-net care.
- CMS says Section 71109 of the 2025 reconciliation law takes effect Oct. 1, 2026.
- HHS says states must limit full Medicaid and CHIP eligibility to people eligible for federal financial participation.
- People such as refugees, asylees, parolees and trafficking victims who are not otherwise federally matchable will no longer be required to receive state-funded full Medicaid coverage.
- KFF says the law narrows Medicaid and CHIP eligibility to lawful permanent residents, Cuban and Haitian entrants, COFA residents and certain lawfully residing children and pregnant immigrants in states that choose that option.
CMS said the new Medicaid and CHIP limits are required by Section 71109 of the 2025 reconciliation law and take effect on Oct. 1, 2026. HHS guidance says states must begin limiting full-benefit eligibility determinations to people for whom federal matching dollars are available under the statute.
In plain terms, states can no longer use state dollars to provide full Medicaid coverage to some lawfully present immigrants if they do not fall into a federally matchable category, according to the HHS guidance. That affects groups such as refugees, asylees, parolees and trafficking victims who may have been covered under state-funded programs before.
Independent reporting also points to a broader coverage hit. STAT reported Sept. 30 that hundreds of thousands of legally present immigrants could lose Medicaid coverage starting Oct. 1. KFF estimates about 1.4 million lawfully present immigrants are expected to lose health coverage because of the 2025 tax and budget law overall, but that estimate is broader than the immediate CMS/HHS eligibility change.
KFF says the law narrows Medicaid and CHIP eligibility to specific categories, including lawful permanent residents, Cuban and Haitian entrants, COFA residents and certain lawfully residing children and pregnant immigrants in states that opt in. Emergency Medicaid remains federally matchable for emergency medical conditions under the guidance.
The practical effect will depend on how states rewrite their rules, whether they cut back state-funded coverage programs and whether courts are asked to weigh in.
By the numbers
- Oct. 1, 2026 - Date CMS says the new Medicaid and CHIP limits take effect.
- 1.4 million - KFF estimate of lawfully present immigrants expected to lose health coverage because of the 2025 tax and budget law overall.
Yes, but: The law’s effect is not entirely immediate in practice - states still have to update eligibility rules and program designs before many people feel the change.
What's next: States are expected to update Medicaid and CHIP eligibility rules ahead of the Oct. 1, 2026 effective date.