CMS Issues Guidance Limiting Federal Medicaid and CHIP Funding for Certain Noncitizens

The Centers for Medicare & Medicaid Services issued guidance on April 8, 2026 implementing new restrictions on federal Medicaid and CHIP funding for certain noncitizens, based on section 71109 of the Working Families Tax Cut legislation (Public Law 119-21). The restrictions, which take effect October 1, 2026, limit federal matching funds to U.S. citizens, U.S. nationals, and specific statutorily identified noncitizen categories, though emergency medical treatment funding remains available and the policy does not affect states' option to cover lawfully residing children and pregnant women. CMS Administrator Dr. Mehmet Oz oversees the implementation, with CMS providing states technical assistance and operational guidance through a State Health Official letter covering eligibility systems, verification processes, and claims processing. The policy represents a significant shift in immigrant healthcare coverage, requiring states to update their administrative systems while CMS uses existing oversight tools to ensure accurate federal fund claiming.

New Federal Funding Restrictions for Noncitizen Healthcare Coverage

• ▪CMS issued guidance on April 8, 2026 to implement new limits on federal Medicaid and CHIP funding for certain noncitizens
• ▪The new federal Medicaid and CHIP funding restrictions for certain noncitizens will begin on October 1, 2026
• ▪Dr. Mehmet Oz is the CMS Administrator
• ▪The federal Medicaid and CHIP funding restrictions for certain noncitizens are based on section 71109 of the Working Families Tax Cut legislation, Public Law 119-21
• ▪The new limits restrict federal matching funds for Medicaid and CHIP for individuals who are not U.S. citizens or U.S. nationals, or who fall into specific noncitizen categories identified in statute

Implementation Requirements and State Responsibilities

• ▪CMS will use existing oversight tools to ensure accurate claiming of federal funds under the new noncitizen funding restrictions
• ▪CMS will provide technical assistance to states to support compliance with the new noncitizen funding restrictions
• ▪The State Health Official letter on noncitizen Medicaid and CHIP funding restrictions is available at https://www.medicaid.gov/federal-policy-guidance/downloads/sho26001.pdf
• ▪CMS issued a State Health Official letter providing states with operational guidance on eligibility systems, applications, verification, and claims processing for the noncitizen funding restrictions

Exceptions and Programs Not Affected by the Changes

• ▪The new statutory changes do not apply to the option states have to cover lawfully residing children and pregnant women in Medicaid and CHIP
• ▪Federal Medicaid matching funds remain available for the treatment of emergency medical conditions for noncitizens under the new funding restrictions
• ▪The new statutory changes do not apply to matching funds for Health Services Initiatives in CHIP

Perspective of Immigrant rights advocates

• ▪The October 1, 2026 implementation of noncitizen Medicaid and CHIP funding restrictions creates uncertainty for immigrant families currently enrolled in these programs
• ▪The CMS guidance implementing section 71109 of Public Law 119-21 reduces healthcare access for noncitizen families who contribute to communities through work and taxes
• ▪Limiting federal Medicaid and CHIP funding for certain noncitizens may force families to delay necessary medical care until conditions become emergencies

Perspective of State Medicaid administrators

• ▪State Medicaid agencies must update eligibility systems, applications, and verification processes by October 1, 2026 to comply with the noncitizen funding restrictions in section 71109
• ▪States may face increased administrative costs to implement the citizenship verification and claims processing requirements outlined in the CMS State Health Official letter
• ▪State CHIP programs must distinguish between coverage categories affected by the new restrictions and those exempted under the lawfully residing children and pregnant women option

Perspective of Fiscal conservatives

• ▪The CMS guidance on noncitizen funding restrictions implements congressional intent to limit federal healthcare expenditures for unauthorized immigrant populations
• ▪The Working Families Tax Cut legislation section 71109 ensures federal Medicaid and CHIP matching funds are reserved for U.S. citizens, U.S. nationals, and statutorily qualified noncitizens